Infaltion is an interesting concept since it both gets headlines and is a concern for most Canadians who rely on the Liberal government’s reported data for disclosure of the general trend and on their own family budgets for what actually happens to them. The gap between these is material.
About 43% of Canadian’s family income goes to taxes at all levels. Without doubt, tax is the highest cost everyone in Canada faces.
After paying taxes, Canadians spend 35% of their income on housing and 25% to 40% on food and transportation. While not everyone has a home, everyone needs a place to live and food to eat so these costs are the root of all distemper over the actual “inflations” Canadians experience rather than the “core inflation” we hear from the Bank of Canada in setting interest rate policies which excludes food and energy (which is a major component of transportation). After housing, transportation, and food debt payments comprise the next largest budget item and those payments move in tandem with interest rates.
Justin Trudeau came into power in 2015. Let’s review the bidding on how his leadership has affected ordinary Canadians actual cost of living.
Housing - Canadian home prices have doubled since Trudeau became Prime Minister. The average renter paid $966 a month in 2015 but today pays an average of $2,178 a month. Housing cost inflation for Canadians has averaged over 9% a year since Trudeau was elected.
Transportation - The average cost for a new car in 2015 in Canada was $27,563. The average cost of a new car today is about $61,000. Using the cost of a car as a proxy for the cost of transportation, transportation inflation has averaged roughly 10%.
Food - The Canadian food price component of the Consumer Price Index (CPI) was 140.9 in October 2015 and is 185.2 now, a rise of 31% or an average annual rate of 3.4%. But food inflation tends to lag owing to grocery chain competition and accelerates only when input costs to the grocery chains reach the point where prices must rise to remain profitable. Food price inflation reached 10.4% in January 2023, its highest rate in 40 years.
Interest rates - The Canadian prime lending rate was 2.7% when Trudeau was made Prime Minister. Today that rate is 7.2%. Borrowing costs have inflated by an average of 12.2% annually since Trudeau became Prime Minister.
How are you liking Liberal Canada today? Oh yeah, with massive government borrowing and persistent deficits, expect taxes to rise and don’t forget the useless “carbon tax” which punishes Canadians and benefits no one (since CO2 is harmless and Canadian emissions are trivial even if CO2 had a material role in climate).
Don’t expect this ugly situation to improve any time soon. Trudeau’s immigration policies have seen Canada’s population grow at far faster than the growth in housing stock so the severe shortage of homes is growing, not abating. Bloomberg had an article today that captured the issue succinctly.
While the truth is obvious, the Liberal administration simply lies about it. If you believe the CPI, you would conclude that the average inflation rate since 2015 was 2.6% (the rate of change from a CPI of 126.6 to 157.1 over 8 years continuously compounded).
Consumer Price Index for Canada
If you buy it, vote Liberal in the next election and buy a tent so you can join the thousands of Canadians enjoying the Trudeau solution to the housing problem he has created for you. It might not hurt to start using narcotics since Canada will be sure you have a safe supply and medical care when you overdose and you will fit right into to your new residential community.