By far the biggest impact on The Compass Food Bank & Outreach Centre in 2022 was from the very high rates of inflation. What we have seen over the past couple of years is in sharp contrast to what we saw over the previous twenty. From 2000 to 2020, the Consumer Price Index rose an average of 1.9 per cent per year. In 2021, prices began to rise more rapidly by 4.7%. In the year ending December 2022, they rose by 6.3%. There were several causes. The economic recovery was more rapid than expected as COVID became less widespread. Also related to COVID were material shortages and supply chain disruptions. The Russian invasion of Ukraine resulted in sharp energy price increases.
Increases in food prices were even sharper than those of the total basket of goods and services purchased by the average Canadian. In 2021, the food component of the Consumer Price Index rose by the same 4.7% as the total index, but in the 12 months ending in December 2022 it rose by 10.1%. It’s not hard to see why there has been a sharply increased demand on food banks.
A second significant economic impact comes, ironically, from the development that will ultimately play a large role in moving inflation back to much lower levels. That is the sharply rising interest rates that we have seen since the spring of 2021. High and rising interest rates are a proven tool for reducing inflation. But the way in which they work, reducing demand and slowing economic activity creates a heavy economic burden. If your monthly rent rises sharply because your landlord’s mortgage payment rose, your food budget will likely suffer, particularly if you are on the lower end of the income spectrum.
These trends in inflation and interest rates don’t just affect those who need the services of food banks. They also adversely affect the finances of donors. Food banks are caught in the middle at a time when their clients need them most.
High inflation, and the high and rising interest rates aimed at bringing it down, won’t last forever. It is entirely likely that we will see some relief from both late in 2023, In the meantime, we have seen significant increases in average hourly wage rates, and there have been some government policies aimed at easing the current burden. Regardless, it is going to be a while before economic conditions improve enough to reduce the strain on food banks such as The Compass. And even when that does happen, the economic circumstances of our clients will take a long time to catch up.