This article originally appeared in the Financial Post. Below is an excerpt from the article.
By Jack Mintz, December 22, 2023
As 2023 comes to a close, three “Is” sum up Canada’s economic policy failures: inflation, immigration and investment. Voters are angry and are looking for better answers than their political leaders have been delivering, whether in Europe, the U.S. or Canada.
Let’s start with inflation. Yes, inflation rates are dropping, as politicians point out. But consumers are underwhelmed. They worry about price levels, not just rates of change. And after their recent sharp rise, prices aren’t going back down, not unless there’s deflation, which rarely happens. Seasonally adjusted, consumer prices have risen 14.3 per cent since January 1, 2021. When it comes to necessities — three-fifths of the average household’s budget — food prices are up almost 20 per cent, transport costs 15.5 per cent and shelter costs 13.4 per cent. For low-income Canadians, whose budgets go mainly to necessities, it’s even worse.
When inflation drives spending above income that spells “misery,” as Dickens’ famous Mr. Micawber reminded us in David Copperfield. And that’s what has happened in this country. From January 2021 through last month, the hourly wage rose just 10.8 per cent (from $30.75 to $34.08). With prices up 14.3, that means inflation-adjusted wages declined 3.5 percentage points, spelling misery for many.
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