06/19/2019 16:42 EDT

Canadian Food Prices Are Accelerating. Blame Weather And Donald Trump.

Fruit and vegetable prices have risen sharply, but tech and entertainment are getting cheaper.

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Consumer prices are rising faster in Canada than the experts had been predicting, and while bad weather is playing a part, the Trump administration’s trade wars may be making things worse.

Statistics Canada’s consumer price index for May showed prices jumping by 0.4 per cent in a month, four times as quickly as experts had been predicting. Much of the increase was driven by higher food prices, particularly fresh vegetables and some fruits.

StatCan/HuffPost Canada

The price of potatoes is 16.4 per cent higher than a year ago, while apples are 22.1 per cent more expensive.

While it’s not unusual for prices of some items to spike by large amounts from time to time, Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, says two things are likely driving up the cost of fruit and vegetables in Canada today.

Watch: What to know about Canada’s 2019 food guide. Story continues below.


The first is poor weather in California, where Canadian importers source a lot of produce during the winter months. The second is disruptions caused by the Trump administration’s tariff war with Mexico, as well as other countries.

“It probably means a lot of importers had to seek alternative sources to get the produce they needed to sell,” Charlebois told HuffPost Canada by phone. “Procuring food overseas has become more complicated in the past few months.”

But it’s not all bad news for shoppers; some items have seen noticeable price drops over the past year. Notably, Internet access costs dropped by nearly 10 per cent over the past year, and “telephone equipment,” which includes handsets, fell by more than 6 per cent. But wireless plans aren’t getting any cheaper, with telephone services up 3.2 per cent in a year.

StatCan/HuffPost Canada

And technology is continuing a years-long trend of falling prices, even despite the threat of disruptions from the U.S.-China trade war. Books, gasoline and toiletries also fell in price.

All the same, the unexpectedly strong inflation print for May changes the outlook for Canada’s economy a little. The Bank of Canada is under less pressure to lower interest rates if inflation is running hot, meaning indebted Canadians may not get much relief on their debt payments, which are now at a record high.

With inflation and economic growth slowing in many parts of the world, central banks are starting to signal to the markets that there may be interest rate cuts ahead. But in Canada, there is little reason to cut, CIBC economist Royce Memdes wrote in a client note.

“The Bank of Canada has every reason to remain on the sidelines despite chatter about (lower interest rates) from their counterparts in other jurisdictions,” he wrote.

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