After initial demand during the pandemic, used car prices are expected to soften into the new year.CARLOS OSORIO/Reuters
It feels like there’s no escaping inflation, no matter where you are in the world or what you’re buying.
Rising interest rates are jacking up borrowing costs, while supply chain issues and high demand are bringing up the price of just about everything else. Earlier this year the headline inflation rate in Canada hit a multidecade high of 8.1 per cent, and the most recent reading, for October, sat at 6.9 per cent. Statistics Canada releases its latest Consumer Price Index numbers on Wednesday.
But even as the cost of living has risen at an alarming pace, there are some products that are seeing prices fall, and we cite a few of them below. Some goods, such as lumber, are on the cusp of having prices drop, while others, such as certain produce items, have seen price declines already that could be at risk of reversing.
Used cars
Everyone wanted a car when the pandemic started, and the timing couldn’t have been worse.
Baris Akyurek, director of analytics with AutoTrader.ca, said the production of new cars slowed because of microchip shortages, while demand rose sharply as people looked to avoid public transport and moved further out of urban centres.
Consumers turned to the used market, and prices exploded as a result. The average price of a used car on the AutoTrader platform peaked at just over $38,000 in June, 2022, an enormous increase from the average price of $26,759 in February, 2020.
However, prices have been steadily decreasing each month since June; in November, the average price of a used car was $36,682.
There was also good news on the supply side: As of October, the site had 27 per cent more cars available than a year prior, which will add to downward pressure on prices.
Mr. Akyurek expects car prices will continue to soften into the new year, but the caveat is that they likely won’t return to prepandemic prices any time soon, especially because car makers continue to struggle with supply chain issues, and demand remains strong.
Certain fresh produce items
Grocery stores have been a focus of people’s frustration over inflation, as the cost of food has cut into people’s paycheques.
But Sylvain Charlebois, a Dalhousie University professor specializing in food distribution and economics, said there have been a few key products that have actually decreased in price over the past year.
As of the end of November, broccoli was 13 per cent cheaper compared with a year prior. Peppers were down 12 per cent, while cucumbers were down by the same percentage.
Meanwhile for meats, Dr. Charlebois said pork prices had dropped by 9 per cent, owing to oversupply. Chicken drumsticks, generally a loss-leader, were down by 7 per cent, although chicken in general has become more expensive.
Dr. Charlebois cited favourable growing conditions as the reason why prices for certain types of produce products had dropped. However, he said this trend could reverse in the new year, and advised consumers to take advantage of relatively low prices now.
A breakdown of everything you need to know about inflation
Lumber
Remember the frenzy around lumber prices in 2021? In May of that year, benchmark prices reached a peak of US$1,686 per thousand board feet, an enormous increase from its usual range around US$200 to US$500.
Today, prices have come back to earth around the US$400 mark after sustained declines since February.
Keta Kosman, owner of the Madison’s Lumber Reporter in Vancouver, said it may still take some time for the average consumer to notice decreases in pricing, since the complicated economy of lumber sales means that retail outfits receive product months down the road.
She said there will could be a lag time of around six months before retail prices meaningfully come down from their current high levels.
Retailers are also trying to figure out where prices will stabilize after such a volatile period. However, it’s safe to assume that buying wood at your hardware store and the cost of materials when booking a local contractor will begin to decrease in the new year.
Ms. Kosman also said that lumber prices also affect packaging-related items, such as pallets and crates, which could point to downward price pressure in other products as well.
Why lumber price trends are so hard to nail down
Cellphone bills
In a report earlier this year, Priscilla Thiagamoorthy, senior economist at Bank of Montreal, noted that phone services were bucking the inflation trend, with three consecutive months of dropping prices over the summer.
“The CRTC ruled in favour of policy aimed at increasing competition and lowering mobile services prices, providing one bright spot amid an otherwise dreary inflationary picture,” Ms. Thiagamoorthy wrote in a note last month.
Phone service costs increased slightly in October from the previous month, but year over year, the costs were lower by 4.2 per cent, according to Statistics Canada.
Used bikes
Biking was one of those activities that everyone turned to after the onset of the pandemic. It was an obvious way for people to get outside and exercise when everything else in life was limited.
Bike shops were among the first businesses in those days to see their stocks completely clear out, especially when it came to entry and mid-level bikes. Then, people turned to the used market, and Tom Sands, a volunteer of Bike Pirates in Toronto, said the used market went haywire.
People were starting to flip new bikes on the used market for much more than they were originally worth. Used bikes that may have fetched a couple hundred dollars before the pandemic were going at double that rate.
Even shops like Bike Pirates, which Mr. Sands said aims to keep used bike prices low for those new to the activity, had to slightly raise their prices because of difficulties in attaining bikes and the parts to fix them.
While it’s hard to pin down data on used bike sales, Mr. Sands said it’s clear that prices have come down from their pandemic highs, although they’re still slightly more expensive than prepandemic.
However, he said consumers can look forward to a regular winter season this year, where bike shops are cutting deals to get rid of old stock, and where it might be easier to find reasonably priced used bikes since demand is lower.