By Julie Gordon and Rod Nickel
OTTAWA/WINNIPEG, Manitoba (Reuters) – At a warehouse on an industrial stretch in Ottawa, giant metal crates of donated groceries are piled high as volunteers sort canned goods, pasta and other foods to be distributed to pantries across the Canadian city.
Demand has surged 33% on the Ottawa Food Bank from pre-COVID-19 pandemic levels, with visits up as spiraling grocery, gas and rent prices, together with fast-rising borrowing costs, leave more Canadians struggling to make ends meet.
“We’re absolutely seeing more people,” said Rachael Wilson, chief executive of the Ottawa Food Bank, adding the organization is now spending C$6 million ($4.4 million) a yr on food, up from C$2 million pre-pandemic.
“That is because the price of food has risen … but in addition due to variety of people who are turning to a food bank at once,” said Wilson. “It’s unfortunately an ideal storm.”
Canada’s headline inflation rate has eased to six.9% from a peak of 8.1%, but food costs are still accelerating and underlying price pressures remain sticky.
At the identical time, the Bank of Canada (BoC) has hiked rates of interest by 350-basis points in only seven months, considered one of its sharpest tightening campaigns ever, to attempt to force inflation back to its 2% goal.
The result’s Canadian consumers and small businesses are being squeezed from either side, prompting politicians, unions and even some economists to implore the central bank to slow its pace of tightening.
The bank this week signaled its tightening campaign was nearing its peak, but made clear it was not done yet, because it hiked rates by 50-bps to a fresh 14-year high.
In a television interview after the choice, BoC Governor Tiff Macklem said restoring price stability was hard, but rampant inflation could be worse.
“I understand numerous Canadians are in debt and rate of interest increases will put more stress on them. It’s something that we’re watching closely,” he told Radio-Canada.
Canada, with its pricey homes and top of the G7 household debt levels, is especially sensitive to higher rates of interest, with fears mounting the BoC’s aggressive hikes will trigger a recession.
Wes Farnell, who runs Eight Ounce Coffee in Calgary along with his wife Jen, said their specialty coffee equipment business was growing by 25% to 35% a yr before the pandemic, after which boomed as lockdowns led to surging demand for high-end lifestyle appliances.
Now he’s already seeing signs that hot inflation and recession worries have consumers focused on essentials moderately than luxury appliances, which is adding as much as fewer large orders whilst the vacation shopping season approaches.
“Our wholesalers are definitely more tentative about spending money,” said Farnell. “Everyone’s nervous … Will people be spending money? Will there be any money to spend? Will inflation go up even further?”
The pain can be being felt on the farm, where record high debt levels and surging operating costs are weighing on many farmers, despite strong grain prices.
For Brodie Haugan, who farms along with his parents near Orion, Alberta, inflation has hit especially hard, coupled with a relentless drought.
With the worth of feed rising faster than cattle prices, Haugan reduced his 400-cow herd by 30% in spring.
He also delayed buying a much-needed latest truck, as the price shot as much as C$100,000 from C$75,000 pre-pandemic.
“Right across the board, all the things has increased in price, making it very difficult to actually do anything in any respect,” Haugan said.
($1 = 1.3516 Canadian dollars)
(Reporting by Julie Gordon in Ottawa and Rod Nickel in Winnipeg; Editing by Josie Kao)
Copyright 2022 Thomson Reuters.
