OTTAWA/WINNIPEG, Manitoba, Oct 30 (Reuters) – In a warehouse on an industrial stretch in Ottawa, giant metal crates containing donated groceries are stacked as volunteers sort canned goods, pasta and other food for distribution to Canadian city pantries. .
Demand jumped 33% at the Ottawa Food Bank from pre-COVID-19 levels, with visits up as the prices of groceries, gas and rent, along with rapidly rising borrowing costs, are forcing more Canadians to struggle to make ends meet.
“We are absolutely seeing more people,” said Rachael Wilson, executive director of the Ottawa Food Bank, adding that the organization now spends C$6 million ($4.4 million) a year on food, compared to 2 million Canadian dollars before the pandemic.
“It’s because the cost of food has gone up…but also because of the number of people who are turning to a food bank right now,” Wilson said. “It’s unfortunately a perfect storm.”
Canada’s headline inflation rate has eased to 6.9% from a high of 8.1%, but food prices continue to accelerate and underlying price pressures remain lingering.
At the same time, the Bank of Canada (BoC) raised interest rates by 350 basis points in just seven months, one of its toughest tightening campaigns to date, in an attempt to bring the inflation at its target of 2%.
The result is that Canadian consumers and small businesses are under pressure from both sides, prompting politicians, unions and even some economists to implore the central bank to slow its pace of tightening.
The bank signaled this week that its tightening campaign was nearing its peak, but clarified that was not over yet, as it raised rates by 50 basis points to a new 14-year high.
In a TV interview after the decision, BoC Governor Tiff Macklem said restoring price stability was not easy, but runaway inflation would be worse.
“I understand that a lot of Canadians are in debt and that interest rate hikes will put more pressure on them. This is something we are watching closely,” he told Radio-Canada.
“EVERYONE IS NERVOUS”
Canada, with its expensive homes and the highest levels of household debt in the G7, is particularly sensitive to higher interest rates amid growing fears that the BoC’s aggressive hikes could trigger a recession.
Wes Farnell, who runs Eight Ounce Coffee in Calgary with his wife Jen, said their specialty coffee equipment business grew 25% to 35% a year before the pandemic, then exploded as lockdowns drove demand growth of high-end lifestyle appliances. .
Now he is already seeing signs that inflation and recession worries are causing consumers to focus on the essentials rather than luxury devices, reducing the number of large orders even as they approach. of the holiday shopping season.
“Our wholesalers are significantly more hesitant to spend money,” Farnell said. “Everyone is nervous… Will people spend money? Will there be money to spend? Will inflation increase further?”
The pain is also being felt on the farm, where record debt levels and rising operating costs are weighing on many farmers, despite high grain prices.
For Brodie Haugan, who farms with his parents near Orion, Alta., inflation has hit particularly hard, coupled with relentless drought.
With the price of feed rising faster than that of cattle, Haugan reduced his herd of 400 cows by 30% in the spring.
He also delayed buying a much-needed new truck, as the cost soared to CA$100,000 from CA$75,000 before the pandemic.
“Everything in all areas has gone up in price, which makes it very difficult to really do anything,” Haugan said.
($1 = 1.3516 Canadian dollars)
Reporting by Julie Gordon in Ottawa and Rod Nickel in Winnipeg; Editing by Josie Kao
Our standards: The Thomson Reuters Trust Principles.
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