Food Insecurity

Food Insecurity has become a major problem for millions of Canadians. Armine Yalnizyan writes:

Almost six million people were food insecure last year in Canada. More than a third of them were in Ontario, where 16 per cent, or one in six households, struggle with food insecurity.

Food insecurity ranges from having to limit the essentials to doing without food entirely because of lack of money.

In Ontario in 2021, 249,000 households missed meals, reduced their intake of food or went days without eating. Ontario was the only province where more people were food insecure in 2021 than in 2020.

Count on more people going hungry this year. That’s because food is the most difficult to ignore of the three basic drivers of decades-high inflation rates: housing, gas and food.

Food has also become the most relentlessly rising cost in household budgets, up 10.8 per cent this year over 2021, the fastest pace of price growth since 1981.

To deal with the problem, the Trudeau government has put several measures in place:

Last week the Trudeau government introduced $4.6 billion in federal aid to be spent on inflation relief until the end of 2023, almost every penny for those with low incomes.

The package includes $2.5 billion over the next six months to provide a bit of extra cash for about 11 million people currently receiving the GST tax credit, providing low-income seniors an additional $233.50, a single mom with a child $386.50 more, and a couple with two children an extra $467.

There is also a one-time $500 top up to the federal housing benefit, costing $1.2 billion and reaching 1.8 million eligible renters.

Predictably, the Right is up in arms:

Bank economists and some fiscal conservatives have pushed back hard against these measures. As in other countries, the chattering classes have embraced a new economic theme: government efforts to fight inflation will trigger even more inflation by adding spending to the mix.

Pierre Poilievre, Canada’s new leader of the Official Opposition, chimed in, saying: “The problem with spending more money as a solution to inflation is that it simply pours more gasoline on the inflation fire.”

In truth the measures are so modest (only $3.2 billion in additional spending this fiscal year, targeted to cash-strapped households) that they amount to about 0.1 per cent of nominal GDP and one per cent of current growth, hardly a tail that could wag a dog.

Along with the child-care fee rebate, financed by the feds and promised by the Ontario government to start in April (money that has yet to arrive in mailboxes), there’s a lot of talk but not a lot of cash flowing to households.

There’s no chance current measures will spur inflationary overspending anytime soon, and there is more trouble on the horizon this fall.

Gas prices are down from the highs of the summer, but forecasts are pricing in significant increases in the coming months.

Poilievre blames all this on Trudeau. He calls it "Justin Flation." He's loud. But he doesn't know much.

Image: The Toronto Star

Reason Over Passion

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.

Image: Quotefancy