Inflation has officially hit 8.1% and broken another record in Canadian history

It finally happened — as predicted by the Bank of Canada last week, inflation in the country has hit a staggering 8.1%.

Just under a week ago, Tiff Macklem, the governor of the Bank of Canada, attempted to mentally prepare Canadians for a spike in inflation.

“It’s probably going to go a little over eight,” Macklem said while speaking to the Canadian Federation of Independent Business (CFIB) on Thursday. “We know oil prices were very high in June, so I wouldn’t be surprised to see it move up.”

ICYMI: Governor Macklem assures Canadians that high inflation is not here to stay. #cdnecon #economy https://t.co/bA9V8sfd0P pic.twitter.com/gMdDJgpC8V

— Bank of Canada (@bankofcanada) July 14, 2022

Now, Statistics Canada has confirmed the forecast.

“The rate of consumer inflation continued to rise, reaching 8.1% year over year in June, following a 7.7% gain in May. The increase was the largest yearly change since January 1983,” noted the federal statistical agency today.

This inflation rate includes the rise in gas prices. If we put gas aside, the Consumer Price Index still rose by 6.5% year over year.

Excluding gasoline, the #CPI rose 6.5% year over year in June, following a 6.3% increase in May. Learn more: https://t.co/CMvIxTYW9q. pic.twitter.com/gR3AAyOFBC

— Statistics Canada (@StatCan_eng) July 20, 2022

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There’s a faint ray of hope, though, as the Bank of Canada believes this high inflation isn’t here to stay.

Macklem predicts inflation will dip in the second half of the year “pretty gradually.”

“As we get into next year, we’ll start to see it come down a little faster,” said the governor on July 14. “We think it will be about 3% by the end of next year and 2% in 2024.”

Macklem addressed CFIB just a day after the Bank of Canada announced a 100-point — or 1% — interest rate increase on Wednesday. With increasing pressures from inflation, Canadians are wondering if it will go higher soon. It’s already been raised four times in a year.

Before the final 1% rate hike came, analysts were expecting a 0.75% increase. But the Bank of Canada admitted that inflation in the country is “higher and more persistent” than it had anticipated back in April.

Let’s see if we can trust their forecast this time.