Cost of living putting pressure on families despite slight decline in inflation rate

Inflation increase slows down Lower fuel costs soften the inflation rate increase, but not for many of life’s basics. CTV’s Leah Larocque reports.

Despite some relief at the pumps last month, the high cost of living continues to squeeze Canadians’ pocketbooks.

Canadian inflation declined to 7.6 per cent year-over-year in July, according to the latest numbers from Statistics Canada released Tuesday.

But the cost of food continues to rise. Prices were up 9.9 per cent compared with a year ago, the fastest pace since August 1981.

Johnny Paolozzi runs Subito Sandwich on Gladstone Avenue in downtown Ottawa. He says it is hard to keep up with the high price of food.

“Everything! everything in general. No matter what we touch, and the supply chain too! When I get an invoice now… I look- did I get the product and how much did it go up? It’s scary,” says Paolozzi.

Paolozzi says he has noticed all items are going up. “You will pick something up one day, and two days later it will be increased by 20 dollars! It hard to price your sandwiches because you feel for your customers.”

He says he has had to raise his prices by nearly $2 since the start of the pandemic. But the increase does not cover all the higher costs of items. “Mayonnaise was at one time 30 to 40 bucks, but I went to buy some the other day and it was $75.”

“We are staying alive … but it’s a lot of hard work,” says Paolozzi.

The slight decline in inflation in July comes after a nearly 40 year high of 8.1 percent in June. The decline was largely driven by a decline in gas prices.

Vivek Dehejia is an economics professor at Carleton University; on the lower inflation in July he says, “It is good news, but I wouldn’t say that it is brilliant, exciting news to shout from the rooftop, it is still 7.6 per cent.

“Prices are still going up very fast and we still have a big problem to deal with. You have to reverse the prices from going up, in other words get inflation back down to 2 per cent, where it is supposed to be, and we are very far away from that.”

Dehejia says it is still too early to see if inflation has peaked and rates will continue to decrease.

“I would like to think that it has peaked at 8.1, but it is still possible that we could have some month-to-month spikes so for example, if the war in Ukraine takes a nasty turn, and there is a crunch in oil and gas prices, it could spike above eight per cent again.”

The Bank of Canada is expected to raise interest rates again in September. Dehejia says, “I think the lesson here for the Bank of Canada, is to not be complacent, we aren’t out of the woods yet.”

--With files from the Canadian Press.