Canadians are enduring one of the fastest price spirals in history. What’s the Bank of Canada waiting for?

Inflation is the great destroyer of money and driving a stake through it can't come soon enough.

Unfortunately, the Bank of Canada has continued to put its concerns about a possibly fragile economic recovery ahead of fighting inflation.

Last week, it chose again to keep its key lending rate at a rock-bottom 0.25 per cent rather than launch its long-anticipated series of rate hikes to curb inflation.

For months, it has merely signalled that it will raise rates rather than actually doing so.

What is it waiting for?

Canadians are enduring one of the fastest, steepest price spirals in history.

In the short space of a year, the inflation rate has nearly quintupled, to 4.8 per cent from 1 per cent, according to Statistics Canada, a 30-year high.

The impact of that shock to the system has been felt everywhere - at the gas pump, the grocery store and your energy bill.

But perhaps nowhere more noticeably than in the housing market.

In the past year, the price of the average house in Canada spiked by almost 27 per cent, according to the Canadian Real Estate Association.

Average prices for houses in Toronto and Vancouver have climbed to about $1.1 million and $1.23 million, respectively.

Previous spikes don't come close to matching the current one.

At the peak of the 2006, 2010 and 2017 house-price booms, average house prices rose by 14 per cent, 10.4 per cent and 17.8 per cent respectively.

Those previous surges laid the foundation for the unaffordability of all types of housing, including rental accommodation, coming into the pandemic.

Matters have since gotten worse, and the Bank of Canada must accept its share of responsibility for that.

With its practice of maintaining deep-discount interest rates and only flirting with rate hikes, it has compelled buyers to bid up house prices ahead of threatened increases in borrowing costs.

Meanwhile, with inflation unabated, consumers are rushing to stock up on food, clothing, appliances and electronics before prices rise yet again.

That pushes prices up still further, of course.

The Bank of Canada's January survey of Canadian consumers found that they expect inflation to remain above 3.5 per cent for the next five years.

Absent its intervention, such expectations of permanent high inflation will become a self-fulfilling prophecy.

Prices will keep rising because prices keep rising.

That is a vicious cycle that the Bank of Canada needs to break now.

Its failure to act is not, of course, the sole cause of abnormally high inflation. A dysfunctional supply chain, labour shortages and Omicron-related absenteeism play a role.

But it has consistently underestimated inflationary pressures in the economy.

As recently as October, it forecast 2022 inflation of only 3.4 per cent. That was a significant miscalculation. Just three months later, in January, it revised its forecast to 4.2 per cent.

The Bank of Canada needs to get on with raising its key lending rate to its ideal level of 2 per cent. That's eight times the current rate.

Which means it has a lot of room to fight inflation with higher rates without slowing economic growth.

Today's headline" or general rate of inflation - 4.8 per cent in Canada; and 7 per cent in the U.S., a 40-year high - disguises more severe inflation in many sectors.

For instance, StatCan's index of raw material costs for Canadian manufacturers has soared by more than 36 per cent in the past year.

House-price inflation isn't caused entirely by frenzied house-buying.

Construction costs have soared.

The major inputs" in building and renovating shelter have jumped in price.

That includes energy (up about 65 per cent in the past year), metal and other construction materials (35 per cent), chemicals (30 per cent) and forest products (13 per cent).

The Bank of Canada's determination not to disrupt an economic recovery is commendable.

But the speed and strength of the current economic boom caught it off guard.

The Canadian economy grew by an estimated 6.3 per cent last year, exceeding the Bank's forecasts. It was powered in part by U.S. economic growth of 5.7 per cent in 2021, the highest in 38 years.

Despite the job losses reported this week for January, which are due to Omicron restrictions that already are being lifted, the job market has recovered to pre-pandemic levels. It will gain further strength this year, especially among women and youth, who have been hardest hit by pandemic conditions.

Wage gains have been substantial (though inflation is eroding them). And the consensus forecast for Canadian economic growth is about four per cent this year and three per cent in 2023.

Those are above-average rates of growth. And that's factoring in the supply-chain woes and a tight labour market, problems that will ease in the second half of the year.

Which means the economy is at risk of overheating, and that the time to rein in inflation is now. The longer the Bank of Canada waits, the bigger and more painful its rate hikes will have to be to be effective.

All movements go too far. And inflation-fuelling cheap money is one of them.

David Olive is a Toronto-based business columnist for the Star. Follow him on Twitter: @TheGrtRecession