Economic and Social Reports
Assessing the rise in broad-based inflationary pressure during 2021 and 2022

A key feature of the buildup in inflationary pressure over the last two years is the extent to which it became increasingly broad-based, with elevated price increases affecting a gradually wider set of products and services. During this period, higher prices for gasoline, shelter, food, and consumer durables have all put upward pressure on headline inflation, as supply disruptions coupled with strong household demand fueled price growth.^Note 

While consumer inflation eased in late 2022 on lower gas prices, key sources of upward price pressure, including food and shelter, showed little signs of moderating.^Note  December 2022 marked the twenty-first consecutive month that the headline rate has been above three percent, and the tenth consecutive month above six percent. Overall consumer prices have risen by 11.4% during the past two years, while grocery prices have increased 17.4%.

This article highlights the amount of consumer spending that has been impacted by high inflation since price pressures began to build in early 2021. Using expenditure weights from the Consumer Price Index (CPI), it reports on the share of the expenditure basket that falls into different inflationary ranges, first based on all measured products and services, and then separately for food products purchased at grocery stores.

Chart 1 classifies each of the specific products and services used to calculate the CPI into four distinct price ranges: those with year-over-year price changes of three percent or less; those with price growth of more than three percent to an upper bound of six percent; those in the more-than-six to ten percent range; and lastly, products and services with yearly price increases that exceed the ten percent mark. Each of these goods and services is then weighted by its corresponding CPI basket weight to provide an estimate of the share of consumer spending on products in each of these price ranges.^Note 

Data table for Chart 1



Data table for chart 1
Table summary
This table displays the results of Data table for chart 1 3.0% or less, 3.1% to 6.0%, 6.1% to 10.0% and Greater than 10%, calculated using percentage of basket weight units of measure (appearing as column headers).

	3.0% or less	3.1% to 6.0%	6.1% to 10.0%	Greater than 10%
	percentage of basket weight
2021
January	79.1	16.9	2.1	1.7
February	74.1	16.9	8.6	0.3
March	64.8	21.9	8.1	5.0
April	63.5	18.5	13.6	4.4
May	56.9	24.7	7.8	10.6
June	57.1	19.9	6.1	16.9
July	53.4	24.9	4.4	17.4
August	46.5	23.4	11.9	18.2
September	50.3	18.5	13.3	17.9
October	46.2	24.0	12.5	17.3
November	43.0	26.5	13.3	17.2
December	41.2	23.3	17.8	17.8
2022
January	32.5	35.4	13.3	18.8
February	31.3	34.0	14.0	20.7
March	33.1	25.4	19.5	22.0
April	28.6	23.6	24.0	23.8
May	24.0	26.4	21.9	27.6
June	22.6	26.6	32.0	18.9
July	23.4	26.5	34.0	16.0
August	19.1	29.4	35.7	15.8
September	18.4	30.8	31.9	18.8
October	14.6	32.1	34.9	18.4
November	16.4	35.0	30.0	18.6
December	26.1	30.9	27.8	15.2
Source: Statistics Canada, Consumer Price Index, special tabulations.

The idea behind Chart 1 is to provide a visual sense for the quantity of consumer spending that has gradually been impacted by high inflation as price pressures have steadily built up. In January 2021, about four-fifths of all expenditure outlays were on products and services that had seen prices rise by three percent or less during the previous twelve months.^Note  In that month, spending on products with yearly price increases of more-than-three to six percent accounted for 17% of the expenditure weight. Only 4% of expenditure outlays were on products with elevated price increases of more than 6%.

By December 2021, steady price growth had brought headline consumer inflation to 4.8%. Spending on products in the initial three percent-or-less range now accounted for 41% of outlays, while those in the more-than-three to six percent range comprised just under one quarter of the expenditure weight. Notably, products and services with yearly price increases of more than 6% now accounted for more than one-third (36%) of the expenditure basket, with half of this spending on items with price growth above the ten percent mark.

When headline inflation peaked in June 2022, the share of expenditure outlays in the three percent-or-less range had fallen to 22%, while spending in the elevated ranges of more-than-six percent (the top two ranges) now accounted for one half of the expenditure weight. Almost 20% of expenditure outlays in June were on products with annual price increases of more than ten percent.

While the gradual easing of headline inflation in the second half of 2022 did not substantially alter the extent to which inflationary pressures remained broad-based, some improvement was apparent at year end. After reaching a low of 15% in October, the expenditure share on goods and services in the three percent-or-less range rebounded to 26% in December, as spending in the upper two elevated ranges (yearly increases of more-than-six percent) declined to 43% of the expenditure weight.

A deeper look at broad-based food inflation

The buildup of inflationary pressure has been far steeper and broader in scope among food products.^Note  Chart 2 reproduces the price range estimates reported in Chart 1, focusing solely on food items and their corresponding expenditure weights.  At the start of 2021, over 90% of spending on food was on products with yearly price changes of three percent or less; by December 2021, only 20% food expenditures were in this range, while the share of spending on items in the top two elevated price ranges (yearly increases of more than 6%) accounted for one half of food outlays.

Data table for Chart 2



Data table for chart 2
Table summary
This table displays the results of Data table for chart 2 3.0% or less, 3.1% to 6.0%, 6.1% to 10% and Greater than 10%, calculated using percentage of basket weight units of measure (appearing as column headers).

	3.0% or less	3.1% to 6.0%	6.1% to 10%	Greater than 10%
	percentage of basket weight
2021
January	93.9	3.5	1.7	0.9
February	75.5	17.6	6.0	0.9
March	75.2	18.5	0.0	6.3
April	89.4	0.4	10.3	0.0
May	76.7	13.2	10.1	0.0
June	62.0	17.6	15.4	5.1
July	67.5	24.2	6.4	1.9
August	52.5	25.3	18.4	3.8
September	44.3	26.9	16.8	12.0
October	32.9	41.6	18.0	7.5
November	30.7	36.4	24.4	8.5
December	19.5	29.8	41.4	9.3
2022
January	9.3	32.8	39.0	18.8
February	4.3	27.0	49.4	19.3
March	6.7	7.0	53.6	32.7
April	2.7	12.8	46.4	38.1
May	1.5	11.2	40.1	47.2
June	2.5	16.0	49.0	32.4
July	4.8	9.0	46.1	40.1
August	4.6	8.6	27.2	59.6
September	4.4	5.6	24.0	66.0
October	6.6	9.1	35.1	49.1
November	6.5	9.7	23.5	60.3
December	4.6	11.4	16.5	67.6
Note: Data are limited to food products purchased from stores. Source: Statistics Canada, Consumer Price Index, special tabulations.

In early 2022, the share of food spending in elevated ranges escalated rapidly. When headline consumer inflation reached its peak in June, less than 5% of food spending was on items in the three percent-or-less range, while items with yearly price increases of 6% or more accounted for over 80% of the expenditure weight for food products.

The second half of 2022 also witnessed a sharp rise in the share of food spending in double-digit territory, with little relief as headline inflation eased late in the year. In December, food items with yearly price increases of more than 10% accounted for two-thirds of food expenditures.

References

Fradella, A. 2022. Behind the numbers: What’s causing growth in food prices? Catalogue no. 62F0014M. Ottawa: Statistics Canada.

Statistics Canada, 2023. Research to Insights: Consumer price inflation, recent trends and analysis. Catalogue no. 11-631-X.