Inflation: How Ontarians pay among the highest price hikes out of the lowest wage increases

Ontario residents are paying among the highest price increases out of the lowest wage increases, a labour economist says.

The annual inflation rate climbed to 2.9 per cent in Ontario last month, an increase of half a point compared to a year ago.

Higher prices for gasoline and food were key factors in driving inflation higher across Canada, the federal agency also said Friday.

But in Ontario, higher provincial electricity costs, up 8.9 per cent, also contributed.

Only Quebec fared worse, where prices rose 0.4 per cent to 3.4 per cent, due to an even higher than average pop in gasoline prices.

During the same month, both provinces had wage growth of only 1.7 per cent, the lowest rate of any province except Manitoba, noted Erin Weir, an economist with the United Steelworkers of Canada.

“In other words, central Canadians are paying for the highest price increases out of the lowest wage increases,” Weir said in an email commentary.

On a national basis, inflation across Canada rose 0.4 per cent to 2.6 per cent in February, Statistics Canada said.

Higher prices for gasoline and food drove the national increase on continuing turmoil in the Middle East pushed oil prices above $100 U.S. a barrel.


Economists expect the oil price spike to be short-lived.

“Our expectation is that increased production elsewhere in the region will result in this pressure being short-lived,” RBC assistant chief economist Paul Ferley wrote in a note to clients.

With unemployment still high, the bank expects inflation to drop back below 2 per cent this year, allowing the Bank of Canada to maintain interest rates at their current low level.

Core inflation, which excludes the highly volatile energy and food categories, rose to 2.3 per cent, above the Bank of Canada’s two-per-cent target line.

Following a two-tenths pop in January, the first two months of 2012 reverses what had been a generally downward trajectory in inflation that began last May.

While unlikely to be seen as permanent, the upward trend could cause some re-thinking at the Bank of Canada, which had been expecting inflation to continue falling.

Statistics Canada said the big mover in the past two months has been gasoline, which is exerting upward pressure on most energy prices and transportation costs.

Gas prices rose by 2.6 per cent over January and were 8.9 per cent more than a year ago.

Meanwhile, the cost of food continued to rise faster than inflation overall — it was 4.1 per cent higher than a year ago, as the cost of meat rose 7.1 per cent and bread by 7.2 per cent.

Other items that saw price increases included shelter, household operations, clothing and footwear, transportation, health and personal services, and alcoholic beverages and tobacco.

Of the eight major components tracked by the agency, only recreation, education and reading saw a pull-back in prices from a year ago.

Original Article
Source: Star
Author: Dana Flavelle