Despite a renewed surge in COVID-19 cases, people are back in force “doing things” – eating at restaurants, travelling, going to shows and tending to their personal-care needs – all of which are getting uncomfortably more expensive by the month.
While prices for goods have gone parabolic and increased 9.2 per cent in March compared with the year before, Statistics Canada reported this week, inflation in services also hit 4.3 per cent last month, tracking closely behind spiralling services inflation in the U.S.
Compared with a year ago, dental service prices were up 4.3 per cent, restaurant meals were up 5.7 per cent, airline fares were up 7.2 per cent, and hotels were up a stunning 24.4 per cent (albeit from the crater hotel prices were in last year).
Meanwhile, services related to owning and renting homes also soared, with shelter costs climbing 6.8 per cent and home insurance rising 8.6 per cent.
The problem is, not all inflation behaves the same. Inflation for items related to shelter and services tend to be “stickier” than for goods inflation, since prices for “stuff” respond much quicker when consumers cut back their spending.
In other words, services inflation takes longer to work itself out. And since services account for a larger share of consumer spending than goods, that could mean higher inflation lingers for longer.
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Jason Kirby