In this week’s EconMinute, we’re talking about the increasing cost of taking a vacation.
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Last Wednesday, Statistics Canada released the latest Consumer Price Index data on inflation. It was not an encouraging update: inflation remains painfully high and energy and food continue to drive a lot of the increase in consumer costs.
However, increasingly—and much to the chagrin of the Bank of Canada—consumers are seeing an increase in prices across a wide range of products beyond food and energy.
One of the categories in which consumers are likely to face the biggest sticker shock is an unfortunate one for Canadians looking to go on holiday: travel services. Since last year, the cost of those services—which include accommodations and travel tours—has increased by a whopping 20%.
So what exactly is happening with travel costs?
- In the first summer after COVID hit, prices of hotels and tours nose-dived. From there, they fluctuated quite dramatically, likely in response to changing COVID restrictions.
- Since January, however, travel-related costs have surged, with the largest increases coming in the last few months as Canadians take time off for summer vacation and international travel starts to come back.
- Perhaps a reflection of being a destination for international travel, Alberta has seen one of the biggest increases in travel costs at 28%.
- Only BC saw a higher increase, at 33%.
- Manitoba is the only province to see an increase of less than 10%.
Most importantly, this increase does not include gas prices which would certainly give Albertans pause when it comes to planning road trips. All told, higher costs are likely forcing some Albertans to postpone or scale back their travel plans.