Price Inflation and Shrinkflation Hitting Home

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CANADIAN MONEY

THUNDER BAY – LIVING – As the prices continue to climb at the grocery store, at the gas station, and for many products, consumers are feeling the pinch.

In Thunder Bay this morning, June 10, 2022 the price of a litre of regular gasoline is as high as $216.9 on Memorial Avenue at the Esso. You can purchase a litre of the liquid gold for less, but in all likelihood for the foreseeable future prices are headed up.

There are two realities, as the price of diesel fuel rises the cost for shipping goods will go up. The prices for diesel have gone up as well and there doesn’t seem to be much end to that scenario in sight.

In the local grocery stores, in many cases prices appear to be going up higher than the inflation rate put out by Statistics Canada. A simple example, there has been a ten cent hike in the price of a tall can of Arizona Iced Tea in local stores. The price has gone up ten per cent.

Ocean Spray Cranberry Juice has gone up in price but has also shrink-flationed the container size. The bottle was 1.89 litres and is now 1.77 litres. In most stores the price has remained the same, but the amount of product is less.

Portion sizes in many restaurants have dropped too. Perhaps what some are not realizing is consumers will pay for value.

The price factor in northern communities is magnified as the price of aviation fuel and transport is added to the price of groceries and other goods that are flown in to so many northern communities.

Consumers are Worried

Ipsos’ Canada says that, “During the pandemic, households have saved a lot more cash than usual, and recent media reports indicate that Canadians are sitting on $300-billion in excess savings1. Where this money is spent – and how quickly – has big implications for the economy. So far, despite Canadians having record access to money, we’ve yet to see a post-pandemic spending spree.

“Many experts in the financial and government sectors point to macro numbers such as the unemployment rate, GDP etc. to conclude that all is well. But we believe the opposite is likely. It seems that Canadians are simply not feeling that confident about either their own or the country’s economic situation at the micro-level. Inflation and rising interest rates, along with the war in Ukraine and concerns about a myriad of other issues have added to the underlying apprehensions that Canadians have been feeling.”

Supply Chain Issues

Consumers are also being hit with supply chain issues that are creating price pressure.

At the start of the global pandemic, as people needed computers, cameras and accessories for new home offices, there was increased demand and reduced supply. Many items were almost impossible to get, and the demand fuelled increases in prices of those items.

That is likely for some consumer goods with supply chain issues and growing consumer demand.

Travel Pressure

Will rising fuel prices impact your travel plans? For many, the price of gasoline having doubled over the past year is impacting plans for travel.

There will be upward price pressure for travel as well.

All in all, for the most part, price inflation will be like the weather, we might all talk about it, politicians will talk about it, but like the weather there isn’t all that much people can do about it.