Canada inflation: How we compare to other G7 nations
Canada inflation: How we compare to other G7 nations
While Canadians are feeling the pain of record-high inflation, among G7 nations we are surpassed by Germany, the U.S., and the U.K., who are also experiencing astronomical rates of increase over the past year.
While much of this inflation is fuelled by pandemic shutdowns and supply chain disruptions, Russia’s invasion of Ukraine has amplified these existing pressures among advanced economies, which are seeing a price rise in nearly everything — from food and fertilizers to energy and natural gas.
The spillover effects of COVID-19 and the Russia-Ukraine war are now affecting the pockets of many households in the advanced G7 economies.
With the meeting of G7 finance ministers underway this week in Bonn, Germany, CTVNews.ca compiled data from the International Monetary Fund (IMF), Statistics Canada, and the Organization for Economic Co-operation and Development (OECD) to analyze and compared how Canada’s inflation stands among its G7 peers.
Can't see the graphs below? Click here
Inflation hits all G7 nations but the U.K. leads with 9%
While every G7 country saw rising inflation, the U.K.’s shot up to 9 per cent in April – its highest since the early 1980s. Meanwhile, the U.S. reached its highest level in more than 40 years, at 8.3 per cent. Canada'st inflation also reached a peak at 6.8 per cent, the highest since 1991.
A recent report by the IMF shows that global economic prospects suffered a huge setback, largely exacerbated by Russia’s invasion of Ukraine. The report said such events raise economic risks, and policy tradeoffs can become more challenging. Inflation is now a “clear and present danger for many countries”, according to the report.
Experts at the IMF project that due to the war-related disruptions, global inflation to remain elevated for much longer than anticipated earlier.
Among its G7 peers, Canada has the fourth highest inflation followed by Italy, France and Japan. With an estimated lowest inflation rate of 2 per cent, Japan is seeing its strongest inflation in three decades.
The central banks across all G7 nations are now rushing to tighten their monetary policy, as many drift away from their inflation targets. Just last month, the Bank of Canada raised its key interest rate target by half a percentage point to one per cent to curb inflation. It has further said there will be more rate hikes.
Ukraine crisis fuels food and energy prices
In a recent speech in Montreal, Bank of Canada deputy governor Toni Gravelle said that a "perfect storm" boosted inflation.
For consumers, this is a double whammy.
The economic upheaval brought by the pandemic and the war in Ukraine has impacted inflation, Gravelle said in his remarks. Regular purchases like gasoline and groceries will continue to shoot up due to the higher prices for commodities such as oil, wheat, and fertilizer.
Moreover, due to the high cost of production, businesses are passing a portion of this cost to regular households.
According to Statistics Canada, higher prices of fertilizer and natural gas have increased the cost for farmers, who have passed along some of these costs to consumers.
Almost all G7 nations are now feeling the pain of high food prices.
Recent data from OECD shows that Canada has the second highest food inflation among its G7 peers.
Experts in Canada say that rising inflation will push more Canadians to the risk of hunger as inflation outpaces their grocery budgets.
One of the leading contributors to fuel inflation is energy prices.
With Russia supplying around 19 per cent of the world’s natural gas and 11 per cent of oil, energy prices have jumped alarmingly and this holds true for all G7 nations. Canada lags behind G7 nations, when it comes to energy prices.
European countries in G7 are taking a bigger hit.
Among the G7 economies, Germany is the most dependent on Russian fuel and the steep price hit is being felt by its industrial-heavy business sector as well as consumers. According to recent data by the OECD, gas spot prices in Europe are more than 10 times higher than they were a year ago. The cost of oil has also doubled over the same period.
To combat the rising energy prices, Germany recently slashed its fuel tax through a US$16.5 billion energy package. Other European G7 nations have taken similar steps.
With the ongoing Ukraine crisis, France also introduced new measures to help households, companies, farmers, and fishermen cope with rising energy prices. Last year, France capped gas and power price increases and offered financial handouts to low-income households. To shield companies and consumers from higher bills, Italy approved a package of US$4.9 billion. The package will cover 5.2 million families keeping their energy bills at the level seen last summer.
Ahead of the G7 meeting, in a recent speech to the Brussels Economic Forum on Tuesday, U.S. Treasury Secretary Janet L. Yellen commended European leaders for their proposal to phase out all Russian energy supplies within six months.
“No country controls the wind and the sun. Let’s make sure that this is the last time that the global economy is held hostage to the hostile actions of those who produce fossil fuels,” she said.
MORE Business News
A new report from TD says Canadian home sales could fall by nearly one-quarter on average this year and remain low into 2023.
The Canada Day long weekend saw gas prices plummet in parts of the country, but the relief at the pumps may not stay for very long, analysts say. The decreases come after crude oil prices slid in June following the U.S. Federal Reserve's interest rate hikes, sparking fears of a recession.
As stocks continue to slump, it can be easy to let your emotions take over if you've got money invested in the market. But experts agree that there's no need to panic if you're invested in the right type of portfolio with the right level of risk.
With increasing rent prices likely to be the reality for many Canadian tenants, some may be wondering how to navigate rising costs, or whether any course of action can be taken, if any. Legal experts across the country share their advice on how to handle a rent hike.
New federal regulations to force down the greenhouse gas emissions from gasoline and diesel will cost Canadians up to 13 cents more per litre at the pump by 2030.
With inflation reaching a 40-year high, many Canadians have been left in a state of worry. Not only about the rising prices of consumer goods, but whether or not they should continue to save money. It’s not such a simple question, and it depends greatly on your circumstances, contributor Christopher Liew explains in an exclusive column for CTVNews.ca.
As inflation rates soar to the highest they've been in Canada in nearly forty years, nearly half of Canadians say that right now, they're doing worse financially than they were at this time last year.
As Canada’s inflation soars, two ‘extreme couponers’ offer their advice on how to save at the grocery store.