Canada: China boom fuels price fear

Voracious appetite for commodities boosts oil, mining, but consumers are feeling the squeeze

As China continues to flex its economic muscle on the world stage, Canadians can expect to feel pinched at the pumps.

A Bank of Canada report released yesterday predicts China’s economy will continue to expand at a furious pace, suggesting the Asian tiger has an endless appetite for commodities such as oil and metals.
While that is expected to fuel profits in Canada’s oil patch and mining sector, ordinary Canadians will be among those paying the price for China’s sustained resource demand and the resulting upward pressure on commodity prices, the report said.

And that could be unwelcome news for consumers who are already feeling squeezed as crude oil prices near $100 (U.S.) a barrel.

“From our drive to work to shopping on weekends, it seems that China is increasingly affecting our daily lives through the prices of the goods we buy,” said the study, part of the bank’s fall review.

“And Canada is not alone. Similar trends have occurred in all of the industrialized economies, suggesting that the `China price effect’ is a global phenomenon.”

The Toronto Star