- Canada’s annual inflation level slowed down to an average of 0.7 per cent in 2020, reported Statistics Canada.
- The Consumer Price Index (CPI) grew at its slowest pace in 2020 since the economic downturns of 2009.
- Barring the price of gasoline, the CPI rose at an average rate of 1.3 per cent in 2020.
As Canadians tightened their pockets and adapted to a life indoors amid the coronavirus pandemic, Canada’s annual inflation level slowed down to an average of 0.7 per cent in 2020, reported Statistics Canada on Wednesday, January 20.
This deceleration came after a surge of 1.9 per cent in 2019, and was primarily fueled by the decline in consumer spending and other COVID-inflicted economic downturns last year.
Canada’s Inflation in 2020 vs Canada’s Inflation in 2009
Before the COVID-19 outbreak turned into a pandemic in March 2020 and sent the entire world into panic mode, it was in 2009 when the jolts of a financial crisis was felt in all corners of the globe.
The Consumer Price Index (CPI), which is a common indicator of inflation, grew at its slowest pace in 2020 since the economic downturns of 2009.
In Canada, durable goods saw an annual average inflation of 1.4 per cent in 2020, slightly up from that of 1.3 per cent in 2019. This price increase amid pandemic was in contrast with the financial crisis of 2009, where the prices for durable goods dropped at a yearly average rate of 3.1 per cent.
©Kalkine Group 2021
Key Highlights of Canada’s Inflation in 2020
- Barring the price of gasoline, the CPI rose at an average rate of 1.3 per cent in 2020, reported StatCan.
- Food prices inflated at an average rate of 2.3 per cent in 2020, registering the highest annual climb among all components. But the latest increase was still slower than that in 2018 and 2019. While prices of fresh vegetables decelerated year-over-year in 2020, meat prices surged at a quicker pace last year than in 2019.
- Gasoline was one of the few components that recorded a price drop on an average basis in 2020, fueled largely by the various lockdown restrictions that prohibited travel. Down by a sharp 14 per cent, this was the largest price decline for gasoline since 2015.
- COVID-triggered travel bans also saw the annual average air transportation prices crash by 0.8 per cent last year.
- Prices for services climbed at a slower rate of 1.4 per cent in 2020, down from that of 2.3 per cent in 2019, and mostly weighed down the pandemic impact on the travel industry. At the same time, prices of insurance premiums and rent jumped last year, up by 6 and 1.7 per cent respectively, as more Canadians opted to stay indoors.
- Prices of recreational cannabis swooped by an average of 10.9 per cent last year as most major pot manufacturers lowered their rates in an attempt to compete with the illegal weed market. The price cut turned out to work as a strategy as licensed pot sales managed to beat illegal sales for the first time ever in the third quarter of 2020.
Since the onset of the pandemic, Canada’s inflation level rose to its highest point of 1 per cent in November last year. StatCan has plans to release the CPI numbers of January 2021 on February 17.