Inflation hit a new three-decade high in January, heaping more pressure on the Bank of Canada to raise interest rates for the first time since the pandemic started. The consumer price index rose 5.1 per cent in January from a year earlier, accelerating from December’s pace of 4.8 per cent and marking the first time since 1991 that inflation has surpassed 5 per cent, according to Statistics Canada. It was the 10th consecutive month that inflation has exceeded the Bank of Canada’s target range of 1 per cent to 3 per cent. (Globe and Mail)
Here are some experts from McGill University that can provide comment on this issue:
Canadian economy and Bank of Canada
Moshe Lander, Course Lecturer, Department of Economics
“The current inflation that Canada is experiencing is transitory in nature and supply side-driven, due to the perfect confluence of COVID-19, natural disasters, supply-chain disruptions and rising global tensions. Most inflationary pressure usually originated in the demand side and the Bank of Canada is much more capable of managing this. Unfortunately, supply-side inflation is much harder for the Bank to control. If the current round of inflation does not spill over into increasing wage demands, then it will dissipate as soon as the various supply-side issues go away. If it does spill over into increasing wage demands, then the Bank will have to act aggressively likely triggering a deep recession that could destabilize the housing and financial markets.”
Moshe Lander is a Course Lecturer in the Department of Economics, where he teaches classes on economic statistics, econometries and financial institutions. His areas of expertise include inflation, recession and unemployment.
moshe.lander [at] mcgill.ca (English, French, German, Spanish)
Rising food prices
Pascal Thériault, Faculty Lecturer, Farm Management and Technology Program
“Consumers have been more aware of their food choices ever since the pandemic started. Some food commodities were affected more than others by the pandemic, but we can see larger trends in food prices. Climate change is also a factor that had an impact and that will continue to have a greater impact on food production not just in Canada but everywhere. For many years now, Canadians had the chance to have one of the cheapest ‘baskets of food’ in the world, quite a feat for a northern country. We are not seeing the market catch up on certain commodities, while others have increased at the same rate as salaries.”
Pascal Thériault is a Faculty Lecturer in the Farm Management and Technology Program and the Director of Community Relations at the Faculty of Agricultural and Environmental Sciences. A trained agricultural economist, his expertise includes agri-food marketing, entrepreneurship, farm business management, food waste, international trade and value chain management.
pascal.theriault [at] mcgill.ca (English, French)