Ontario hasn’t seen a jump in restaurant prices this big since GST came in 27 years ago
Prices for food purchased at the province’s eateries rose 1.9 per cent in January from a month earlier, Statistics Canada reported Friday from Ottawa. That coincides with legislative changes that saw the minimum wage increase more than 20 per cent at the start of this year to $14 an hour.
The price jump was the biggest since January 1991, when then Prime Minister Brian Mulroney introduced a federal goods and services tax, which drove Ontario restaurant prices up 7.2 per cent, the biggest one month gain on record.
Rising restaurant costs in January were part of a broader trend, with total inflation rising 0.9 per cent in Ontario and 0.7 per cent nationally.
“If you were to think that was the result of Ontario’s minimum wage, you’d be correct,” Robert Kavcic, a senior economist with BMO Capital Markets, wrote in a note.
Kavcic called the rise in the cost of eating out in Ontario “an entirely predictable response.”
Many restaurants across the province, spanning from small mom-and-pop shops to larger chains, raised prices on some or all of their menu items around the date the new minimum wage rates came into effect to help offset increased labour costs.
But it’s not only eateries in the province that seem to be raising prices in light of these additional expenses.
Ontario outpaced inflation in other provinces and territories for other categories as well.
Child-care and housekeeping services in Ontario, for example, increased 9.9 per cent in January compared with the same month the previous year, according to Statistics Canada, while Canada-wide that service increased 5.8 per cent. The agency said that coincided with the legislated minimum wage increase.
It’s likely the increase in that service was also tied to the bump in wages, said Royce Mendes of CIBC World Markets.
Bloomberg.com, with files from the Canadian Press
Powered by WPeMatico