Canada’s Inflation Rate Rises To New 30-Year High of 4.8%
While the pandemic comes to an end, the inflation rate of Canada increases significantly. According to the numbers in December, it has increased up to 4.8%, which is all time high for 30 years. This I can be an indication that the Central Bank of Canada would increase their interest rates in the near future. But Jan..26 The central bank’s overnight rate remains at 0.25 per cent, a rate it adopted in a drastic drop in the early days of the COVID-19 pandemic.
Back in September 1991, inflation rate of Canada was 5.5%. This was mainly due to some excessive money printing. Since then, Canada has been successful in keeping the inflation rate in between 1$% and 3% most of the time. However, things seem go out of their control during the past few months. In fact, the Government of Canada failed to keep the inflation rate between desired range for the past nine months consecutively.
All core inflation measures increased in Canada during the past few years. On the other hand, the CPI common measures also increased for the first time in past 10 years. As of now, the country is worried about the impact that the Omicron variant of the Covid virus would create, but the Central Bank has no other choice left than to increase the interest rate.
While dealing with the pressure of pandemic, Canadians will now have to worry about the pressure that comes from increased cost of living as well. Cost of living was not a major concern for most Canadians back in the day. However, things will change in future, and it is the high time for them to be mindful about what they spend their money on.
The benchmark interest rate defined by the Bank of Canada was 0.25%, which is a record low after the pandemic started. However, things will probably change by the end of January. In fact, there’s a 70% chance for it to happen. The cost of vehicles, food, and shelter are all increasing by now. Hence, it is quite difficult to maintain a house and replace a house for an average Canadian.
We can also see a significant increase in the cost of transportation and energy, which is directly causing an impact on the price of food. This will also increase other living expenses, such as the monthly house rental prices that people have to pay.
The Bank of Canada kept its trendsetting interest rate at rock-bottom levels on Wednesday, holding off on planned increases aimed at controlling surging inflation but signalling rate hikes are not far off.
We will most probably be able to see the Central Bank of Canada increasing their interest rate to minimize the negative impact that high inflation rates can create on Canadian economy.