Inflation is surging. And Canadians -- naturally -- are worried. Heather Scoffield writes:
It’s not just that the price of apples and oranges is up well over six per cent and the cost of a fridge is almost 14 per cent higher than a year ago.
It’s that prices across the board are stubbornly high, wages are creeping up too, and now everyone is behaving as though too-high inflation will be here for the long haul.
Year over year, inflation was 4.8 per cent in December, the fastest pace for rising prices since September 1991, Statistics Canada reported Wednesday. Cars, home insurance, food and gasoline were what people noticed the most, although compared to November, gas prices were down.
Justin Trudeau didn't create the problem. And there's not much he can do about it -- for the moment:
The reasons? Mainly bad weather and supply chain dysfunctions, Statistics Canada said. For months now, most of the world has been struggling to deal with bottlenecks in supply chains that have been gummed up by pandemic restrictions and unpredictable surges in demand.
At this moment, however, Trudeau has to do something about managing expectations:
The Bank of Canada noted that employers and business owners were overwhelmingly thinking inflationary pressure is here to stay for a while.
“There’s still another shoe to drop,” says Scotiabank economist Rebekah Young.
The central bank’s quarterly survey of businesses showed that two-thirds of them believe inflation will stick above three per cent for the next two years. And 71 per cent believe they’ll be raising wages some time soon in order to deal with labour shortages and rising prices.
Those numbers are really high, and they suggest to economists that there’s a risk of an inflationary spiral. Higher wages feed more spending, which feeds higher prices.
COVID has made it hard to manage expectations. There's always a new variant around the corner. And, with each new variant, people get more and more cynical. Couple that with the flood of each new conspiracy theory, and any leader walks a tightrope.
One hopes that Justin remembers his father's motto: Reason Over Passion.