P.E.I. inflation hits new high, likely to get worse, says economist

P.E.I.'s annual inflation rate was 7.4 per cent in February, higher than it's been in 30 years and the highest in the country.

Statistics Canada released the latest inflation numbers on Wednesday. The national inflation rate was 5.7 per cent. Prices were up for gas, groceries and shelter.

While inflation is high across the country, for P.E.I. in particular a lot of the problem comes down to the price of oil, said UPEI economist George Jia.

"We tend to rely on oil a little bit more," said Jia.

"Things have to be shipped here, it's a little bit further, but also remember heating oil is a major source of heating on the Island compared to most other provinces and also we're a more agriculture-centred economy. They tend to rely on this primary energy source as well."

Shipping and transportation companies have been announcing they are increasing prices, he said, and that leads to higher prices on the Island when so many consumer goods have to be shipped in.

While increases in prices affect everyone, Jia said they affect some more than others.

"People who have to travel to work and people who actually have lower income are obviously more affected," he said.

Because low-income Islanders will feel the increases more, Jia said the government's targeting of them for emergency aid is the right move, but added the $100 to $150 likely won't take them very far.

Impact of Russian war in Ukraine still to come

Russia's invasion of Ukraine will likely drive inflation higher in the coming months, said Jia.

The current consumer price index, measured through February, is not yet showing the impact of the war.

World oil prices spiked when the war started. They fell again last week, but are still higher than they were previously.

In addition, Russia and Ukraine are big suppliers of wheat and barley so international food prices are also rising.