It’s no secret that many Canadians are feeling financial stress in 2022 — and, unfortunately, it seems that the cost of living in Canada continues to rise at unsettling rates. On Wednesday, Statistics Canada announced that the consumer price index (CPI) for May 2022 rose 7.7 per cent year-over-year — which marked the largest yearly increase in almost 40 years (since January 1983’s gain of 8.2 per cent).
What factors are driving rising inflation in Canada?
According to the Statistics Canada Consumer Price Index, May 2022 release, higher gasoline prices are a key driving factor in the increasing CPI (Note: CPI “represents changes in prices as experienced for Canadian consumers.”).
Specifically, Statistics Canada noted that the “acceleration in May was largely due to higher prices for gasoline, which rose 12.0 [per cent] compared with April 2022 (-0.7 [per cent]).” While 12 per cent from April may seem steep in itself, the reality of gas price increases for consumers is even more striking if we consider that consumers paid 48 per cent more for gas in May 2022 than they did in May 2021.
Other major price increases include energy prices (which rose 34.8 per cent year-over-year in May with the largest one-month increase observed since January 2003), as well as higher prices for services like hotels and restaurants. Moreover, costs for shelter and food also remained elevated in May, Statistics Canada said, “as price growth was unchanged on a year-over-year basis.”
Even without factoring in gas prices, the CPI is still rising, with Statistics Canada noting that “excluding gasoline, the CPI rose 6.3 [per cent] year over year in May, after a 5.8 [per cent] increase in April.”
Many Canadians are struggling to keep up with rising prices
Altogether, growing inflation and a higher cost of living continues to impact Canadians, with Statistics Canada noting earlier this month that rising prices are affecting most Canadians’ ability to meet their day-to-day expenses.
Another factor impacting financial strain for Canadians is that wages, on average, are not rising as fast as prices. According to Statistics Canada’s May 2022 Labour Force Survey, average hourly wages rose 3.9 per cent year-over-year in May.