The December Consumer Price Index released Tuesday shows more progress than expected, but economists are still concerned about some sectors in the economy that are making families lives more expensive.
“Although we're trending in the right direction, we'd like to be getting there faster, and there's still a number of categories where prices continue to climb,” explained Mike Moffat, economist and assistant professor at Ivey Business School.
While the central inflation number has dropped to 6.3 per cent from 6.8 per cent in November, the price for food has stubbornly stayed above 11 per cent, which affects not just consumers but also small retailers.
“Yeah right now everything is expensive,” said Luis Murillo, who was heading into a grocery store to stock up for the next week. Smaller independent stores are doing what they can to absorb the increases.
“We try to have the prices even with less profits to have it affordable for everyone. But it's not easy actually, because the prices keep keeping going up and up. And we have difficulty even of attacking the prices,” said Berries co-owner, Husam Mohammed.
Murillo, who was shopping with his wife, said the increases have been noticeable, and told CTV News London, “$140 each week, $160 every week for two people. So, meat [is] a lot, everything [is] a lot of money.”
The Consumer Price Index fell more than economists predicted it would, but there are still fears a recession is in the forecast this year according to Moffatt.
“It's looking like the likelihood of a recession is going to be somewhere between the 60 to 80 per cent range. The Bank of Canada has a very difficult job where they need to tamp down, you know, a strong economy too, to fight inflation,” he said.
Economists believe the Bank of Canada will once again raise the key interest rate on Jan. 25 to slow the economy more, but there are fears for small grocery retailers who are trying to absorb price increases. If this continues they may not be able to continue for much longer.
“It's not easy to continue for this year because a lot of businesses [have] lost their business. We try and just to stand up so to save the business now. So if [we're] to continue like one more year, it will be, you know, something bad actually,” said Mohammed.
The projection of returning to a normal rate of inflation is sometime in late 2024 or 2025, but after the next rate hike the Bank of Canada is expected to pause at least in the short term.
