Here’s Why You’re Paying More For These 5 Items, According To The Experts

As you have probably noticed, a lot of things are expensive right now. CBC News took a look at the cost of five items people regularly buy and spoke with business owners and industry experts about what’s behind the price hikes.

Baked goods

Purebread co-owner Mark Lamming says the retail cost of the white chocolate raspberry scone rose about 5 percent, when the actual cost to make the item rose nearly 18 percent. (CBC News)

Mark Lamming, co-owner of Purebread Bakery in Vancouver and Whistler, says his white chocolate raspberry scone is now $5, up 5 percent from $4.75 previously, while the cost of making it has risen nearly one 18 percent.

People may be paying more for their favorite treats because of the price of ingredients, he says, which has risen 10 to 15 percent every month for the past two years. The price of flour, for example, has risen 70 percent, she adds.

“It looks like the supply chain is really under pressure and demand has come back faster,” Lamming said.

Vancouver’s Kanadell Japanese Bakery also increased the price of its baked goods this month, says owner Keiko Nakanishi, as flour, eggs and butter are now more expensive.

According to Tony Llewwellyn, director of sales for Snow Cap Enterprises Ltd., drought in the prairies last summer devastated wheat crops, reducing supply and raising the cost of flour. Snow Cap is a BC based food distribution company from which Purebread and Kanadell source most of their ingredients.

Dairy products are also more expensive because the cost of feeding cattle has increased, Llewwellyn adds.

Although the company is mainly supplied with BC products, they occasionally source from other provinces or outside the country. When this happens, transportation costs, including fuel surcharges and service fees, also drive prices up. Llewellyn says they’ve seen about a 200 percent increase in shipping costs from North America and Europe, forcing companies like Snow Cap to pass costs on to small business owners.

“There is nothing wrong with the company, but this is the wrong time to charge such substantial fees,” he said, adding that there should be more government regulation of the fees that carriers charge to prevent price gouging.

Piece of furniture

The cost of using shipping containers, which help deliver the raw materials to make sofas, has increased tremendously, says Rick Ripoli of Stylus Made to Order Sofas, which also drives up the cost of furniture such as sofas. (CBC News)

In January, Rick Ripoli of Stylus Made To Order Sofas spoke with the CBC about the challenges furniture companies face, including rising material costs, supply shortages and longer wait times for items to arrive. .

Things have not changed, he says. Before the pandemic, a shipping container of raw materials from Asia cost Ripoli about $1,800. In March, he paid $15,000.

Trevor Heaver, professor emeritus at the University of British Columbia’s Sauder School of Business, says a surge in purchases in 2021 is partly to blame for the massive rise in shipping container costs.

Heaver says that North American ports became severely congested because workers on the ground could only work so fast.

“So it’s not just about how fast you can unload the ship, but how fast you can move the boxes of commodities through the terminals and how many hours are the warehouses open to receive the boxes and what capacity do they have for empty and return the boxes”. he said.

Raw materials have also become more expensive, according to Ripoli: polyurethane foam, which is used to fill sofas, is a product of oil, and with the increase in oil prices, so has the cost of foam.

“Where price increases used to be three or four percent… [now] it’s always a double-digit increase,” he said.

Used cars

According to AutoTrader.ca, the average price of a used Honda Civic, a popular used car option, has increased 41.7 percent in the last two years in Canada. (CBC News)

According to data from AutoTrader.ca, the average price of a used Honda Civic, a popular choice for used car buyers, increased 41.7% between February 2020 and February 2022.

Meanwhile, the average price of a used vehicle in BC is more than $40,000, the company said, a 32 percent year-over-year increase.

Baris Akyurek, director of marketing intelligence at AutoTrader.ca, says that analyzing shoppers’ habits has given rise to some theories.

One potential reason is health and safety, he says: People no longer want to take public transportation or ride-sharing services and are buying their own vehicle instead.

“Now that things are opening up … we think some of this pent-up demand has started to materialize,” he said.

A low supply of new cars is another factor. Akyurek says ongoing problems with manufacturing Microchips, which control functions inside the vehicle, mean fewer cars are being made around the world.

Once new vehicle production returns to normal, he expects prices to stabilize again.

flowers

Blossom and Vine Co. owner Michelle Hodgson says prices for imported and local flowers have risen since the start of the pandemic, due to a combination of reduced production and increased demand. (CBC News)

In early 2020, the average bouquet cost $35 to $40, says Michelle Hodgson, owner of Vancouver-based Blossom and Vine Co.. Now, expect to pay more than $50 for the same bouquet.

Prices for roses and carnations, often imported from South America, have risen about 40 percent in the last two years, he says.

Meanwhile, locally produced flowers (chrysanthemums, snapdragons, tulips, peonies) have also become more expensive as demand from local businesses increases.

Hodgson adds that many growers around the world have had to stop or reduce production during the pandemic.

“So we are still seeing the effects of the decisions that were made at the beginning of the pandemic that affect our supply today,” he said.

According to Bridgitte Anderson, CEO and President of the Greater Vancouver Board of Trade, many businesses that are members of the organization are struggling with these costs, as well as job challenges like staff retention.

She says rising costs and inflation don’t give businesses much choice, forcing them to raise prices to keep operating.

“We’re really seeing it across the board, whether we’re talking about small businesses or medium-sized businesses,” Anderson said.

Wooden boards

UBC forestry professor John Innes says that when home building and renovations soared in 2021, so did demand for wood, which was already in short supply. (CBC News)

Habitat for Humanity, a nonprofit organization, is currently building 19 homes in Mission, BC, and the cost of building them has increased substantially, according to Steph Baker, interim executive director and vice president of construction.

Baker says the cost of the lumber exceeded his original budget by 35 percent, about $114,000 in additional costs.

“It’s affecting our ability to build affordable housing,” he said.

The nonprofit organization also runs ReStores, stores that sell new and used items, including home décor and construction supplies.

But donated wood products, like lumber and furniture, are hard to come by, Baker says.

“He left the same day he arrived at the flat.”

John Innes, professor of forestry at UBC, says the price of lumber has fluctuated “strongly” in recent years for a variety of reasons, including pandemic restrictions that shut down production for many BC companies in 2020.

There was also a belief that there would be a reduction in US homebuilding that year, he adds, leading companies to produce less wood.

In BC, logging deferrals for mature trees have reduced the area that companies can cut, while invasive bark beetles —which feed on trees— and forest fires have made it difficult to obtain good quality wood.

“The amount of available wood is getting scarcer and therefore prices are going up,” Innes said.

Will this continue?

Andrey Pavlov, a finance professor at Simon Fraser University, says he thinks companies will eventually start producing more items that will level prices.

But it also says that governments should make it easier to produce goods within Canada so that the economy is not vulnerable to global forces.

“Especially for smaller economies like Canada, it’s very important to be competitive and create business conditions where local companies can take on more manufacturing,” Pavlov said.

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