As inflation hits 6.8%, ‘you really have to think twice about everything’
Worst is likely yet to come, experts say
MONTREAL • Quebec chef and entrepreneur Marco Gagnon says price increases of as much as 30 per cent for cardboard boxes since last fall have forced him to get creative.
Gagnon, who runs the maker of vegetable purées called Epurée, says he’s now begun delivering his products in reusable tote bags as much as possible — instead of cardboard boxes — to cut down expenses. He’s also stopped making broccoli purées because the imported vegetable costs too much.
“It’s not easy,” Gagnon said Wednesday in a telephone interview. “It seems like everything is going up every month, including transportation. I need to focus on lower-cost vegetables now because otherwise production is going to cost too much.”
Gagnon isn’t alone in having to adapt to surging prices. Canada’s consumer price index rose 6.8 per cent in April from a year earlier, Statistics Canada said Wednesday — the fourth consecutive month in which inflation outpaced analyst expectations. Inflation in Quebec matched the national average.
All key measures of inflation rose, and food and shelter prices jumped at rates last seen in the early 1980s.
On a year-over-year basis, energy rose 26.4 per cent in April, paced by a 36.3 per cent hike for gasoline. Food advanced 8.8 per cent, while shelter rose 7.4 per cent.
And since gas prices are already up more than 10 per cent since the start of May, “this is the relative calm before another downpour in next month’s report,” Doug Porter, BMO’S chief economist, wrote in a report.
Inflation “is spreading much more broadly, and at clear risk of getting firmly entrenched,” Porter said. “Barring a deep dive in oil prices in coming weeks and months, we expect that the worst is yet to come on the headline readings, and that inflation north of six per cent will still be with us by the end of this year.”
Geopolitical events are stoking the fire, said John Gradek, a faculty lecturer on supply chains and logistics at Mcgill University. That, in turn, will probably lead to persistent inflation, he said.
“Batten down the hatches because we’re not done yet,” Gradek said in an interview. “There’s nothing on the horizon that can mitigate these shakeups we’re seeing in the supply chain. We just have to ride it out and hope that there is a resolution, starting with a good growing season in Canada.”
The situation is especially dire for low-income earners and retirees, said Sylvie De Bellefeuille, a budget adviser at the non-profit consumer organization Option Consommateurs.
“We’re not all equal in front of inflation. We don’t all have the same capacity to handle rising prices,” De Bellefeuille said in an interview. “Unfortunately, inflation affects a lot of basic goods like food. The problem is that items like rent, telephone, electricity are virtually incompressible. For many people, the only place they can cut is on food — which is going to affect health. Yes there are food banks, but it’s a solution that has its limits. When you have no room to manoeuvre, you have to make very tough choices.”
Inflation, adds Gradek, “is going to chew up your savings. You really have to think twice about everything.”