Calgarians feel extra pain with inflation higher than national average

Across Canada last month, inflation hit 5.7 per cent ⁠— and that figure was even higher in Alberta's largest city.

The consumer price index (CPI), a measure of how much the prices of goods and services increased from the same month the previous year, was 6.4 per cent in Calgary for the month of February.

The primary culprits were the higher price of fuel and a larger-than-expected increase in the cost of food.

"We had an interesting upward surprise this morning," said Charles St-Arnaud, chief economist with Alberta Central, which is the central banking facility for the province's credit unions.

"We were expecting an increase in inflation, but it has been a bit more abrupt than what we expected initially."

The CPI measures the rise in prices of all goods and services in the economy, and the rising indicator reflects the financial pain felt by Calgarians as they pay more and more for everyday, necessary items.

This latest figure also doesn't fully reflect the most recent increases in gas prices, which continued into early March as the West levelled sanctions against Russia for the invasion of Ukraine.

St-Arnaud was also surprised by the increase in housing costs in Alberta, which he says is likely contributing to the higher inflation rate in Calgary.

Heating and electricity costs in Alberta, which are directly tied to natural gas prices for most consumers, also figured prominently in the increases.

The CPI shows that Calgary rents increased by 7.5 per cent year-over-year in February compared with five per cent in January, while the cost of buying a home also increased.

Calgarians have enjoyed a more affordable lifestyle in recent years but larger economic forces were bound to hit Calgary eventually as homebuyers target the city looking for a deal, says St-Arnaud.

"You're starting to see people from Vancouver, Toronto starting to look at Calgary as an interesting alternative," he said. "The average house in Calgary is about $600,000. The average house in Toronto is 1.2 million."

The most difficult part of inflation of late is many of the costs are purchases you cannot delay, like food, which increased by 6.8 per cent in Alberta, or costs associated with heating and transportation.

Consumers find savings where they can

For taxi owner Efrem Tesfai, the increase in gas affects his bottom line, even if his cab is a hybrid.

"Business is very slow," he said. "So on top of that, the gas prices are high and affect us very much. I used to spend $18 or $20 a day if I drive full time, 12 hours, but this time $25-plus. So it is a big deal for us."

With the cost of groceries going up, Maggie Hu has resorted to banding together with friends and family to do bulk purchases at big box grocery stores to cut down on costs.

"We do our shopping list very carefully every time this year, not like during COVID-19," she said while filling up her vehicle at a gas station offering a 2¢ per litre promotion. 

"We used to just go around the store and buy this or that, but now we have to buy just what is on the list. So that's a huge change for us."

While many Albertans try to change small habits in an effort to ease the pain at the pumps and grocery stores, governments and the Bank of Canada can only help so much.

Alberta's UCP government has promised Albertans a three-month holiday from the province's 13¢ per litre gas tax.

St-Arnaud says the Bank of Canada is very likely to increase the trend-setting overnight interest rate by at least another quarter percentage point, which will help cool demand as it increases borrowing costs across the economy.

But that will likely do little for people feeling the pain from the cost of food and gas, which are dependent on global price — and Albertans can't put off the purchase of groceries like they can with a couch or a washing machine.

There is little the government can do about easing supply chain shortages or the global price of oil in the short term, says St-Arnaud.

That puts the squeeze on many Albertans, who have some of the highest levels of consumer debt in Canada. But unlike during the last recession, associated with COVID-19 lockdowns, Arnaud thinks it's unlikely the federal government will be able to step in for consumers.

"The government stepped in very quickly and with measures to replace income with CERB and all the other programs," he said. "But in the next recession, it will be much harder for the government to justify those programs, basically to save people who have taken up too much debt."