The Bank of Canada raised its interest rate by half a point Wednesday morning, after higher than expected inflation in April. The move was expected as global economies continue to face challenges. In simplest terms, the economy continues to struggle with supply challenges and is not able to meet demand for goods and services. The result has been rampant inflation, making the cost of living less affordable.
 
"With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further," the Bank of Canada said in a June 1 media release. "The pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2% inflation target."
 
The increase by the bank will mean higher costs for borrowing and will affect the housing market and some business's ability to make investments in their operations.

Inflation crept higher in March as Canada's Consumer Price Index was 6.7% higher than March last year. All eight categories that are tracked by Statistics Canada increased in cost as the CPI recorded its largest increase since 1991, the year the Goods and Services Tax was introduced.
 
The cost of filling up at the pump was one of the key factors, as was higher hotel rates and the cost of housing in general. Fuel is a factor in shipping and transportation costs so the jump in gas prices results in higher bills for food, furniture and other goods.
 
The war in the Ukraine has significantly reduced the supply of oil and gas driving up prices. However, the lifting of pandemic restrictions has also increased demand for many services as people seek out in-person experiences.

Surging fuel costs are adding to the ongoing inflation pressures facing businesses.
 
Prices hit a high of 216.9 cents per litre yesterday in Sooke, caused by global uncertainty from the war in the Ukraine.
 
The increase is having a particularly hard impact on couriers and transportation companies, and will lead to higher prices for customers.
 
The Chamber is working with our partners across BC to advocate for help. For every litre of regular gas, Greater Victoria residents pay 30 cents in provincial taxes and more than 15 cents in federal taxes. The biggest cost affecting the price at the pump is the cost for crude (about half the total price), which is what has risen because of Putin's invasion.
 
BC's Public Safety Ministry said Monday it will not follow Alberta's lead and cut provincial fuel tax.
 
One idea The Chamber is looking at is calling for a carbon tax exemption for companies that transport goods or passengers. The idea being that these businesses help take single driver vehicles off the road and should be encouraged.
 
To find the lowest gas prices in the region, go to gasbuddy.com.