inflation

Tuesday June 21, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday June 21, 2022

Freeland defends budget after Scotiabank accuses feds of ‘doing nothing’ on inflation

A cut in planned government spending could help tame rampant inflation and reduce pressure on the Bank of Canada to hike interest rates, according to a report from Scotiabank.

June 17, 2022

The report from the bank’s chief economist Jean-Francois Perrault and modelling director René Lalonde claims that Canadian fiscal policymakers are “doing nothing of any significance to slow inflation at the moment.”

The authors argue that cutting government spending will take some of the burden to cool inflation off of the Bank of Canada and the private sector.

Scotiabank’s analysis came as Canada’s Deputy Prime Minister and Minister of Finance Chrystia Freeland is met with the head of the U.S. Treasury Janet Yellen in Toronto on Monday to discuss cooperation between the nations and the global inflation concerns.

January 27, 2022

The report cites the Bank of Canada’s renewed mandate from December of last year, which said tackling inflation is a “joint responsibility” between the feds and the central bank.

While the war in Ukraine and ongoing supply chain pains tied to the COVID-19 recovery have been cited as major causes of higher-than-expected inflation so far in 2022, Perrault told Global News in an interview Monday that prices were on the rise before Russia’s invasion.

That was tied to stimulating fiscal policies from governments around the world, which sought to protect households from the pandemic’s downturns, he said.

Though he said efforts to trim the government’s deficit in the spring’s federal budget were “going in the right direction,” Perrault said the latest Liberal spending plan is still contributing to the economy and fuelling demand.

May 10, 2022

“In normal circumstances, that’s fine. The challenge in the current circumstance is we have inflation that is a huge issue from the perspective of Canadians. It’s well outside what the Bank of Canada wants. It’s exceptional, there’s no question about it,” he said.

In this context, he said he believes the Bank of Canada “could benefit from a little help” in the form of cooling government spending.

Scotiabank projects that if the feds plan to increase their spending 2.5 per cent by the end of 2024, instead of today’s planned 4.8 per cent increase, the Bank of Canada could top out its interest rate hike cycle at 2.25 per cent, 75 basis points lower than where Scotiabank forecasts rates will hit by the end of this year.

But Freeland, speaking alongside Yellen on Monday afternoon, said she felt the feds’ latest budget does go far enough to limit government spending.

She said the rate of fiscal consolidation — the rate at which Canada is paying down its debts — is tied for the fastest in the G7, on par with the United States.

While Freeland reiterated that tamping down inflation is “chiefly the job” of the Bank of Canada, she said her 2022 spending plan was already a “very fiscally responsible budget.” (Global News) 

June 14, 2022

Meanwhile, Mr. Poilievre made headlines when he praised the controversial digital-money system. It was the answer for Canadians who wanted to “opt out of inflation,” he claimed. After all, he was a bitcoin investor himself.

The presumptive favourite to win the CPC leadership has been much quieter about cryptocurrency these days.

Perhaps it’s because the crypto world is imploding, just as Warren Buffett and his partner, Charlie Munger, had suggested it might. Two of the history’s greatest and most profitable investors have been down on bitcoin and the cryptocurrency industry almost from its inception. Mr. Buffett famously said he wouldn’t pay US$25 for all the bitcoin in the world. Mr. Munger was even more condemning, saying that in his life he tried to avoid doing anything that was evil, stupid and made him look bad in comparison to others: “Bitcoin does all three,” he said. (Continued: The Globe & Mail) 

 

Friday June 17, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Thursday June 17, 2022

Chrystia Freeland can do more to fight inflation

Canada’s annual inflation rate currently stands at 6.8 per cent — the highest since January 1991. This means the loonies in your pocket are losing nearly seven per cent of their purchasing power every 12 months.

May 10, 2022

With each passing day, it seems more like Canada has slipped out of the COVID-19 fire only to tumble into an inflationary frying pan. And with each passing day, millions of Canadians who were shepherded through the worst health crisis in a century by a responsive federal government are increasingly looking to the same government to spare them from economic disaster.

Those people received some, but only some, reassurance this is happening from federal Finance Minister Chrystia Freeland on Thursday. In a speech to Toronto’s Empire Club, the deputy prime minister revealed how the federal Liberals intend to collar, if not slay, the inflationary dragon. Considering this was Freeland’s first economic update since April’s budget and considering the costs of food, gasoline and a host of other consumer goods have only soared higher since then, her speech was both timely and necessary. But considering the almost total absence of new measures directly aimed at fighting inflation in her presentation, what Freeland said should represent her government’s starting point, not its finishing line. We’ve heard the words. We need more action.

Canada’s annual inflation rate currently stands at 6.8 per cent — the highest since January 1991. This means the loonies in your pocket are losing nearly seven per cent of their purchasing power every 12 months. It means a Canadian earning a median income of $55,700 a year potentially faces an annual inflationary loss of $3,787.60. Thankfully, for many low-income Canadians, some help is coming.

April 8, 2022

As Freeland explained, Ottawa has earmarked $8.9 billion to boost supports for people receiving Old Age Security, the Canada Child Benefit, the Canada Workers Benefit as well as the Canada Housing Benefit. That money will definitely make life more affordable for many people currently struggling to pay their bills and put food on the table. But it’s not indexed to match future increases in inflation. And virtually all of that money was committed in the last two federal budgets. It’s not new ammunition aimed at inflation.

On that front, Freeland offered precious little. The big guns in this fight are being fired by the Bank of Canada. The interest hikes it has introduced so far this year as well as the ones on the way will rein some of the demand driving inflation by making borrowing more expensive. It is a crude, blunt weapon. But it works, as evidenced by the recent cooling of the country’s overheated housing market. Freeland has vowed to respect the Bank of Canada’s efforts and not interfere with it with her government’s fiscal policy.

On that count, she’s correct. At its heart, inflation is a problem of too much money chasing too few goods. The Liberals can’t spend Canada out of inflation. Pumping new money into the economy, putting more money into everyone’s wallets today will drive the inflation rate higher tomorrow — to the point it is eventually uncontrollable and living standards plummet. That’s why the government is right to reject the demands of some federal Conservatives to cut the Goods and Service Tax or carbon tax.

April 1, 2022

To be fair to Freeland, inflation is for the most part a widespread, complex global problem — not one unique to Canada. For more than two years, the pandemic has repeatedly snarled supply chains and made it harder for consumers and businesses everywhere to buy what they needed. Russia’s illegal invasion of Ukraine further exacerbated the situation by disrupting shipments of oil, natural gas and, most frighteningly of all, food. Freeland can try to shield Canada in some ways from these storms; she can’t stop them.

But rehashing old budgetary commitments or trying to take credit for previously announced plans to train more workers aren’t the specific answers we need for the inflation conundrum. The government should use its considerable leverage to clear some of those supply chain hurdles. One suggestion we haven’t heard but deserves consideration would be to reduce the interprovincial trade barriers that continue to be a drag on our economy. If successful, such an initiative could offer relief to consumers and businesses without driving up the inflation rate. In addition, the Liberals should continue to hold the line on new spending and, if it is deemed necessary, confine it to a targeted segment of the population — those most vulnerable and in greatest need. (Hamilton Spectator Editorial) 

 

Tuesday May 17, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Tuesday May 17, 2022

Ontario NDP plan to run deficits for 6 years and cancel gas tax cut

May 10, 2022

Ontario’s New Democrats are pledging to run larger deficits than the Progressive Conservatives and Liberals if elected and would likely not balance the budget for six years, but the party is eyeing some cost savings from cancelling a gas tax cut.

That pledge is expected to save $600 million in the first year by reversing the Progressive Conservative government’s move to reduce the provincial portion of the gas tax by 5.7 cents a litre for six months starting July 1.

Catherine Fife, who has served as the NDP’s finance critic, presented the costing Sunday and acknowledged the high cost of living, including rising gas prices that have topped $2 a litre, but said the temporary cut from the Tories is just a “gimmick.”

“We are looking for a long-term, sustainable strategy to alleviate gas prices, but also to stabilize,” she said, pointing to the party’s promise to regulate gas prices.

Wednesday May 10, 2022

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Wednesday May 10, 2022

As cost of living soars, affordability becomes top Ontario election issue

August 14, 2014

In every Ontario election poll that’s publicly available, the number one concern of voters is the rising cost of living. 

Affordability has rocketed past the perennial top issues of health — even after two years of a global pandemic — and jobs, with the unemployment rate at record lows. 

While the Ontario party leaders are often talking on the campaign trail about making life more affordable, it’s a wonder that they’re not hammering the issue even harder, given how strongly it’s resonating with voters.

“The smart politicians won’t just talk about [the cost of living] as an issue, they will understand it’s a character test,” said Greg Lyle, a veteran pollster and president of Innovative Research Group.

Friday December 10, 2021

Editorial Cartoon by Graeme MacKay, The Hamilton Spectator – Friday December 10, 2021

We’ll all be paying a lot more for food next year, says Canada’s Food Price Report

June 22, 2021

Sky-high food prices were one of many negative impacts that Canadians felt during the pandemic-plagued year of 2021. And a new report suggests that problem is only going to get worse next year.

Canada’s Food Price Report, released today, is an annual report published by Dalhousie University and the University of Guelph that’s the most comprehensive set of data currently available about a subject that all Canadians are impacted by: food.

As with everything else, supply chain issues caused by the COVID-19 pandemic wreaked havoc on food prices and availability. Weather events such as the heat dome also didn’t help put food on the table.

“The meat counter was a big deal this year,” said Sylvain Charlebois, the chief researcher on the report and a professor studying food distribution and security at Dalhousie University in Halifax. 

December 8, 2016

“It really pushed food inflation much higher.”

This time last year, the report was forecasting an increase of between three and five per cent for food prices, with a theoretical family of four consisting of one man, one woman, one boy, and one girl, on track to pay about $13,907 to feed themselves in 2021. 

As it turns out, they were only over by $106. The report tabulates that theoretical family ended up spending $13,801 to feed themselves this year.

In the coming year, Charlebois says food price inflation is on track to be higher with a likely increase of between five and seven per cent — or an extra $966 a year for the typical family grocery bill.

“It’s the highest increase that we’re predicting in 12 years, both in terms of dollars and percentage,” Charlebois said. “It’s not going to be easy.”

As usual, different types of food are expected to go up in price at different rates, with dairy and baked goods expected to be comparatively much more pricey, while past culprits like meat and seafood will look comparatively flat. (CBC)