Surging produce prices push inflation up in Canada

OTTAWA -- Canada's annual inflation rate hit two per cent last month as the weaker dollar continued to drive up prices for fresh fruits and vegetables, the federal statistics agency said Friday.

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Statistics Canada's January year-over-year inflation number was up from 1.6 per cent in December.

The agency's latest consumer price index found the overall cost of food was up four per cent last month compared to a year earlier -- with fresh vegetable prices up 18.2 per cent and fruits up 12.9 per cent.

A closer look at the data shows that lettuce prices last month were 17.9 per cent higher than the year before, apples were up 16.6 per cent and tomatoes up 11.9 per cent.

"Very strong indeed -- much stronger report than what we expected," Desjardins senior economist Jimmy Jean said of the headline inflation number.

"(The increase) is largely in the usual suspects these days -- fruits and vegetables."

The annual inflation rate climbed in every province last month at a time when the weaker Canadian dollar was contributing to higher costs for imported goods. The effects of the steep decline in oil prices have played a big part in pushing down the loonie.

Year-over-year prices moved upwards in every category of the index except for clothing and footwear, which saw a decrease of 0.3 per cent compared to January 2015.

Lower prices in January for items such as natural gas, fuel oil and telephone services kept downward pressure on the inflation reading, the agency said. Natural gas was down 18.6 per cent, fuel oil down 15 per cent and telephone services 2.5 per cent.

The overall January inflation rate also hit the Bank of Canada's ideal target of 2.0 per cent.

The central bank watches the inflation rate very closely whenever it makes decisions on whether to move its benchmark interest rate. Its next policy meeting is scheduled for early next month.

The core inflation rate, which excludes some volatile items such as gasoline, had been 1.9 per cent in December.

Statistics Canada also released its most-recent retail sales data, which showed a drop of 2.2 per cent to $43.2 billion in December compared to the previous month.

The last time retail sales saw a month-over-month drop of that magnitude was April 2010, when it fell by 2.3 per cent, the agency said.

Experts said the decrease was largely due to unseasonably warm weather in December and the impact of Black Friday shopping events that led to stronger numbers in November.

Retail sales fell in almost every sub sector, with motor vehicle and parts dealers seeing the biggest decrease in dollar terms, the report said. They also went down in every province except for Prince Edward Island, where they ticked up 0.1 per cent.

By comparison, retail sales increased 1.7 per cent in November and 0.1 per cent in October.

Here's what happened in the provinces and territories. (Previous month in brackets):

  • Newfoundland and Labrador: 2.4 per cent (1.4)
  • Prince Edward Island: 1.9 (0.9)
  • Nova Scotia: 2.0 (1.2)
  • New Brunswick: 2.4 (1.1)
  • Quebec: 1.6 (1.3)
  • Ontario: 2.0 (1.7)
  • Manitoba: 2.1 (1.5)
  • Saskatchewan: 2.2 (1.8)
  • Alberta: 2.1 (1.5)
  • British Columbia: 2.3 (1.9)
  • Whitehorse, Yukon: 1.9 (0.8)
  • Yellowknife, N.W.T.: 2.0 (1.5)

The agency also released rates for major cities, but cautioned that figures may fluctuate widely because they are based on small statistical samples (Previous month in brackets):

  • St. John's, N.L.: 2.2 per cent (1.4)
  • Charlottetown-Summerside: 1.8 (0.9)
  • Halifax: 1.9 (1.2)
  • Saint John, N.B.: 2.4 (1.2)
  • Quebec: 1.5 (1.2)
  • Montreal: 1.5 (1.5)
  • Ottawa: 1.6 (1.3)
  • Toronto: 2.1 (2.0)
  • Thunder Bay, Ont.: 2.2 (1.8)
  • Winnipeg: 2.0 (1.5)
  • Regina: 2.0 (1.6)
  • Saskatoon: 2.3 (1.9)
  • Edmonton: 2.2 (1.6)
  • Calgary: 2.0 (1.5)
  • Vancouver: 2.5 (2.3)
  • Victoria: 1.9 (1.7)


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