Food joins gas in fuelling Canadian inflation

[Anonymous]

Eric Beauchesne, Canwest News Service   Published: Wednesday, July 23, 2008

OTTAWA -- Just as Canadian consumers are starting to get some price relief at the gas pumps, now they are being hit by higher prices at the grocery store as food joins energy in fuelling inflation.

Food prices -- padded by increases of 44% for flour, 36% for pasta, and 12.3% for baked goods -- rose 3% in June from a year earlier, Statistics Canada said Wednesday, while gasoline prices, which were 26.9% higher -- the steepest spike since hurricanes Katrina and Rite ripped through the Gulf oil patch in 2005 -- remained the major inflation culprit.

In addition, a 9% increase in mortgage interest costs and 14.3% jump in air transportation prices also exerted strong upward pressure on the index.

"We've lost our inflation immunity," CIBC World Markets economist Avery Shenfeld said, who noted that only two months ago, Canada stood nearly alone with Japan as the only major economies not facing the scourge of inflation.

Mel Fruitman, vice president of the Consumers' Association of Canada, said it appears consumers are adjusting to higher gasoline prices by "driving less, or at least trying to drive less," and should food prices continue to rise, he said they will start adjusting by changing their purchasing habits.

"When it comes to food, we have lots of options out there . . . so we don't spend a lot more," he said. "We can do without some of the more exotic foods we've become used to buying.

"Unfortunately, it will usually affect lower income families more, those who don't have quite as much flexibility, who are more dependent on staples such as bread and other wheat products which are definitely going up in price," he said.

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[mobes]

I love the propaganda the mainstream media puts out....high prices don't cause inflation, it's the other way around! That's something I'll address in my next show.