In something of a minor victory for consumers, steep price hikes are becoming less pervasive across the economy.
Around 37 per cent of the goods and services in the Consumer Price Index (CPI) experienced year-over-year price growth of more than 5 per cent in September, according to Bank of Canada calculations. While that’s still much higher than the historical average (14.1 per cent), it’s a significant improvement from earlier this year, when nearly two-thirds of CPI components were rising quickly in price.
“While larger-than-normal price increases remain widespread across goods and services, the breadth has narrowed considerably,” the Bank of Canada said in its latest Monetary Policy Report, published on Wednesday.
As of September, the annual inflation rate was 3.8 per cent – down from a peak of 8.1 per cent in the summer of 2022, but still nearly double the central bank’s 2-per-cent target. The Bank of Canada doesn’t expect a return to target until mid-2025.
A wide variety of products are seeing more subdued price increases – or even declines. Over the past year, prices have risen 3 per cent for fresh fruit, 1.9 per cent for laundry detergent and 1.2 per cent for sports equipment. Prices have fallen 4.6 per cent for furniture and by 4.5 per cent for refrigerators and freezers, tied to an improvement in supply chains and weakness in the real-estate sector.
Still, consumers may find cold comfort in these numbers. Many products appear to have established a new – and much higher – price level. Take eggs, for example. Over the past year, egg prices have risen by a mere 3.1 per cent – but they’re up a whopping 34 per cent over four years.
Decoder is a weekly feature that unpacks an important economic chart.
Matt Lundy