Inflation pain expected when October stats revealed Wednesday

Decade highs are not expected to subside until next year

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“Scarier than October’s Halloween costumes.”

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That’s how one economist — Avery Shenfeld, of CIBC — has foreshadowed Wednesday’s inflation data for last month.

Canadians are paying decades-high prices for just about everything: September’s inflation rate of 4.4% was the highest since 2003.

That upward trend is widely expected to continue, according to previews from economists tracking consumer prices.

“If the U.S. numbers are any guide, Canadian food prices likely surged again,” wrote Shenfeld, adding, “the ongoing supply-chain issues in the auto sector pushed new car prices up even further.  In the shelter component, falling mortgage interest costs were also likely more than offset again by rising new home and rent prices.”

Pressure is being applied to wallets everywhere: in grocery aisles, fuel pumps, and in automobile showrooms.

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“Retail food prices, particularly for meat, have increased substantially in recent months following an earlier jump in agricultural commodity prices.  Prices at the pump rose 5.1% from September to October, building on already elevated levels,” wrote RBC Senior Economist Nathan Janzen and Economist Claire Fan.

“We expect the inflation rate ticked up to 4.5% reflecting higher food, gasoline, and home purchase/ownership costs.”

Some observers — and even the Bank of Canada — think inflation might even nudge close to 5% before the year is done.

The countdown is on for when — in 2022 — the central bank is expected to raise interest rates to try to dampen the problem plaguing households.

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“The Bank of Canada has sounded far too dismissive toward inflation risk throughout the entire year and at times rather stridently so!” wrote Derek Holt from Scotia Economics.

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Rebekah Young at Scotiabank issued a caution about public spending as the Trudeau government has a series of promises to keep when Parliament resumes Nov. 22.

“The finance minister may be wise to pause this fall as the economy navigates turbulence in the months ahead lest she be seen fuelling the flames that could put all the more strain on affordability pressures for Canadians.”

Those affordability pressures are evident in prices for homes across the country which posted percentage increases in the double digits, according to monthly figures Monday from the Canadian Real Estate Association.

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