In April, Canadian consumer prices rose 6.8% year over year, a slight increase from March (+6.7%).
The year-over-year increase in April was largely driven by food and shelter prices. Gas prices increased at a slower pace in April compared with March, moderating the acceleration of the all-items Consumer Price Index (CPI) in April.
Excluding gasoline, the CPI rose 5.8% year over year in April, after a 5.5% gain in March. This was the fastest pace since the introduction of the all-items excluding gasoline special aggregate in 1999.
Russia’s invasion of Ukraine in late February continued to affect energy, commodity and, most notably, food prices. With the unemployment rate falling to a record low in April, strong employment figures tend to put upward pressure on prices. In April, average hourly wages for employees rose 3.3% on a year-over-year basis, meaning that, on average, prices rose faster than wages, and Canadians experienced a decline in purchasing power.
Prices for groceries continue to increase
Canadians paid 9.7% more in April for food purchased from stores compared with April 2021. This increase, which exceeded 5% for the fifth month in a row, was the largest increase since September 1981. For comparison, from 2010 to 2020, there were five months when prices for food purchased from stores increased at a rate of 5% or higher.
On a year-over-year basis, increases in food prices have been broad-based, with consumers paying more for nearly everything at the grocery store. Basics, such as fresh fruit (+10.0%), fresh vegetables (+8.2%) and meat (+10.1%), were all more expensive in April
compared with a year earlier. Prices for starchy foods such as bread (+12.2%), pasta (+19.6%), rice (+7.4%) and cereal products (+13.9%) also increased. Additionally, a cup of coffee (+13.7%) cost more in April 2022 than in April 2021.
The recent period of higher food prices has occurred within the context of numerous events that are continuing to fuel higher prices. With both countries being major wheat exporters, Russia’s invasion of Ukraine in late February put upward price pressure on food products that use wheat. Poor weather in growing regions has also impacted prices for food. Additionally, higher prices for inputs such as fertilizer and natural gas continued to increase the cost of production for farmers, who have passed some of these costs on to consumers.
Higher fuel oil prices contribute to higher shelter costs
In April, shelter costs rose 7.4% year over year, the fastest pace since June 1983, following a 6.8% increase in March. Higher prices for energy sources used to heat homes, such as natural gas (+22.2%) and fuel oil and other fuels (+64.4%), contributed to the increase.
Reflecting the dynamic Canadian housing market, homeowners’ replacement cost (+13.0%) which is related to the price of new homes, and other owned accommodation expenses (+17.2%) which includes commissions on the sale of real estate, both increased in April.
The mortgage interest cost Index (+0.2%) increased on a month-over-month basis for the first time since April 2020.
Monthly gasoline prices slow in April after strong increase in March
In April, gasoline prices fell slightly on a month-over-month basis (-0.7%), following a gain of 11.8% in March. Global crude oil prices declined in April, in part due to lower global demand expectations.
Year over year, consumers paid 36.3% more for gasoline in April compared with 39.8% in March.
On a year-over-year basis, the CPI increased at a faster pace in April than in March in seven provinces.
Although prices in Ontario increased 6.9% in April year over year, they grew at a slower pace than in March (+7.0%). This is in part attributed to the gradual implementation of the provincial and federal agreement to subsidize licensed daycare and the provincial government’s removal of passenger vehicle registration fees.
Price growth slowed the most in Alberta, partly due to the temporary removal of the fuel tax on gasoline initiated by the provincial government.
Rent prices rise in the most populous provinces
Rent prices increased in April (+4.5%) compared with the same month in 2021. The increase in rent was partly driven by price increases in Canada’s most populous provinces: Ontario (+5.3%), Quebec (+4.3%) and British Columbia (+6.4%)