Canada's annual inflation rate highest since 1991: what this means for you

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It looks like prices on groceries, vehicles, and appliances will continue to rise.

According to Statistics Canada, the country’s annual inflation rate is at its fastest pace since 1991.

The consumer price index rose 3.4% on an annual average basis in 2021, the agency revealed in a report on Wednesday.

On an annual average basis, the Consumer Price Index rose 3.4% in 2021, following an increase of 0.7% in 2020. This marked the fastest pace since 1991 (+5.6%). Learn more here: https://t.co/WvzUIQgcLR . #CPI pic.twitter.com/eCn9kTd4Bw

— Statistics Canada (@StatCan_eng) January 19, 2022

The numbers in December also revealed that the consumer price index was up 4.8% compared to December 2020.

StatsCan says the COVID-19 pandemic had a major impact on the rise in prices of goods and services.

“Inflationary pressures stemmed from a combination of widespread global supply chain constraints and pent-up consumer demand as the economy reopened,” the report reads.

As vaccines became widely available and restrictions were lifted last year, Canadians were able to shop, dine and travel more than in 2020. The report says that by September, employment had returned to pre-pandemic levels, so Canadians were consuming more, all while the global economy dealt with supply chain disruptions.

Here’s what these percentages mean for your spending:

Grocery prices will continue to climb

According to StatsCan, grocery prices were up 5.7% in December, seeing the largest yearly increase since November 2011.

Buying apples, oranges and bananas will feel a little heavier on your bank account as prices for fresh fruit were up 5.6%.

“Unfavourable weather conditions in growing regions, as well as supply chain disruptions, led to higher prices for households,” the report states.

Another report released in early December predicted that a family of four would pay an extra $966 for food a year, for a total annual grocery bill of $14,767.

Prices for bakery products also rose 4.7% compared to 2020 as summer droughts reduced wheat crop yields, so it might cost more to fund your pandemic baking hobby.

Prices for vehicles and household appliances increase at a faster pace

Canadians who bought a new vehicle in December 2021 paid 7.2% more than those who did so in December 2020. StatsCan says this was due to the global shortage of semiconductor chips.

Refrigerators and freezers, laundry and dishwashing appliances are also more expensive. Consumers who bought those household appliances in December 2021 paid 8.9% more compared with December 2020.

“The movement is largely attributable to an increase in demand amid global supply chain disruptions,” explains StatsCan.

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Paying more for home and mortgage insurance

The report found Canadian homeowners paid 9.3% more for home and mortgage insurance in December 2021 compared with the year before. This change is because of recent increases in construction costs due to higher prices for building supplies.

StatsCan adds that more frequent weather-related claims, like those related to fire and flooding, may have also contributed to this increase.

Increases in gas prices slow down

A bit of good news for drivers; the report says that gas prices rose to a lesser extent in December (33.3%) than in November (43.6%).

“On a monthly basis, Canadian drivers paid less at the pumps as gasoline prices fell 4.1%, the largest monthly decline since April 2020,” said StatsCan. “The tightening of public health restrictions in response to the new Omicron variant weighed on demand for gasoline.”

Prices for airfare rise

Buying a plane ticket got a little more expensive. StatsCan reported that Canadians paid 24.7% more for airfare in December. The high demand for travel during the holiday season contributed to the monthly price increase.