'Food inflation is too high': Bank of Canada official talks inflation during Windsor visit

A senior Bank of Canada official was in Windsor-Essex on Thursday — one day after the Bank of Canada maintained its key interest rate target steady at five per cent.

Deputy governor Toni Gravelle gave a speech to the Windsor-Essex Regional Chamber of Commerce during its annual general meeting, discussing immigration, inflation and the role that newcomers play in helping the economy grow.

“We at the Bank of Canada are very cognizant that people have been facing a lot more hardship related to increases in prices of all kinds of things, in particular food,” said Gravelle.

“Food inflation is too high, it's coming down, but it still remains too high.”

The Windsor-Essex County Health Unit’s recent Cost Of Living Report indicated 19.8 per cent of the Windsor-Essex County community was dealing with some sort of food insecurity in 2022, according to the Canadian Income Survey.

Gravelle said the Bank of Canada is hopeful to eventually bring interest rates down to a sustainable two per cent by using the policy rate to slow the economy, noting inflation remains volatile, and more data is needed to do so.

“Our goal is to bring inflation down more generally, including food inflation,” Gravelle explained. “And in doing so, we have one instrument, it's our policy rate, and in using that policy instrument we're aiming to slow the economy down so that all kinds of inflation including food inflation, continues to come down and allows more people to live within their means.”

“We’re not there yet,” Gravelle continued. “It’s pretty clear that we’re not on a sustainable path to two per cent yet, but we see the economy slowing. We’re starting to see some good news in that respect. We assess that we no longer see any access demand and that should be reducing inflationary pressures going forward.”

“We are worried about the over tightening as well as under tightening. We don't want the economy to slow down too much unnecessarily. However, we also don't want Canadians to live with high inflation, especially inflation in certain categories like food inflation. So in that sense, we always keep that in mind when we have deliberations.”

“Although we’ve seen some good news in certain inflation measures in October, it’s only one data point. We want to see enough information, enough evidence that we see the inflation on a sustainable path to two per cent.”