With the drop in oil prices, the rate of overall consumer price inflation has subsided, averaging just 1.0 per cent in the first seven months of this year. Economists’ forecasts are for inflation to average close to or slightly above one per cent this year, but then average two per cent or higher in 2016. 

While overall inflation may have waned, it’s not affecting everyone in the same way. It’s impossible not to notice rising food prices in the grocery aisles. So far this year, average prices for food purchased in stores have increased by an average of 4.1 per cent, four times the general inflation rate. In particular, the price of meat is up by almost 10 per cent and the price of fresh vegetables up by an average of six per cent so far this year. Rising prices for food especially hurt lower and middle income households and families with, for whom food consumes a much larger share of their budget.

And despite the plunge in global oil prices, not much of the savings are flowing through to Canadian consumers, because oil companies and refiners have increased their margins. In late August 2015, the price of a barrel of oil dropped to half what it was a year before, but prices at the pump are just 14 per cent lower. Even after excluding taxes and adjusting for the drop in the value of the Canadian dollar, gasoline prices at the pump for Canadians have declined by less than half the drop in the world price of oil.