Canadians were seeing red earlier this year as grocery prices shot up, thanks to a sliding loonie. But the loonie’s bounce-back in the past few months is now taking the pressure off food prices — at least for the moment.
Statistics Canada reported Friday that fruit, vegetables and meat — three items that are sensitive to changes in the dollar’s value — all declined in price in April.
Meat prices fell 2.2 per cent in a month, while fresh fruit fell by 3.5 per cent and fresh vegetables were down 5.4 per cent. Overall food prices were down 0.5 per cent.
But due to rapid price growth in previous months, prices on those items are still up from a year ago. Fresh fruit is 11 per cent more expensive than a year ago, while vegetables are up 11.7 per cent and meat is up 1.2 per cent.
Gas prices creeping up again
Offsetting some of the gains at the supermarket are higher prices at the pump. Gas went in the opposite direction from food prices in April, jumping a notable 8.9 per cent in a month.
But as with food prices, it’s a different story comparing things to a year ago. Gas prices are still 5.8 per cent lower than last April.
StatsCan's gas price index shows gas prices have been creeping up since the start of the year, but are still considerably lower than what consumers were paying from 2011 to 2014. (Chart: StatsCan)
With gas prices no longer such a downward drag on inflation, StatsCan’s Consumer Price Index accelerated in April, and overall prices were up 1.7 per cent, compared to a rate of 1.3 per cent in March.
“The bottom line is that inflation in Canada remains benign,” TD Bank senior economist Leslie Preston wrote in a client note.
Preston and other economists noted that the core inflation rate is very close to the Bank of Canada’s target of 2 per cent.
That suggests the BoC will likely stand pat on interest rates in the coming months. But given the struggles in Canada’s oil patch, the Bank’s low 0.5-per-cent key lending rate “remains warranted,” Preston wrote.