The House

A 20-year spike in inflation could put the bite on the Trudeau Liberals

Is the federal government to blame for a 20-year high in inflation? Economists say no, but that doesn't mean Prime Minister Justin Trudeau and his government won't shoulder some of the blame.

While the experts say it's not Ottawa's fault, it's still the government's problem

People wearing masks shop at a grocery store in Moncton, N.B., on Wednesday, September, 22, 2021. (Christopher Katsarov/The Canadian Press)

Heath Krevesky is a self-confessed political junkie — and a bit of a nerd.

That's his way of explaining why he's been tracking his weekly grocery bill for years now. And why he's worried that inflation is taking a bigger and bigger bite out of his food budget.

"In 2019, it cost me $9,826 to feed myself. In 2020, that cost of feeding myself went to $11,994, an increase of 22 per cent," he said.

"I can't wait to find out how this year wraps itself out. It appears as though it's going to be close to $14,000 for a single individual to feed themselves."

Food prices. Gasoline. A meal out. The cost of many everyday items is going up after inflation hit 4.7 per cent last month — the highest rate in nearly twenty years.

Heath Krevesky of Nanaimo, B.C. says he's noticed the cost of groceries rising throughout the pandemic. (Submitted by Heath Krevesky)

For Krevesky, higher prices means scaling back the menu and adjusting his tastes.

The resident of Nanaimo on Vancouver Island said he buys less meat these days, and when he does, he leans to beef ribs rather than steak.

"It's sort of like your poor man's choice of beef, if you will," he said during an interview for a special segment on inflation airing on this weekend's edition of CBC's The House.

"Everybody would like to be able to afford a prime rib, you know, on a semi-regular basis, I cannot afford that ... Ideally, I like to eat a little bit of beef or chicken, fish, throughout the week, so I get a balanced diet, but it's becoming increasingly more [expensive]."

Shoppers and business owners share their experiences with rising costs and prices, and a panel of economists offer their perspective on inflation in Canada.

Droughts, lockdowns, bottlenecks

It's hard to point to a single factor behind rising prices.

Droughts in Canada and other countries reduced crop yields. The pandemic reduced production in manufacturing plants as consumers emerged from lockdowns with money they're both willing and able to spend.

"What we're seeing around the world is supply chain bottlenecks," Finance Minister Chrystia Freeland said this week when asked by a reporter if the Liberals' plan to spend another $100 billion on post-pandemic programs is to blame for the jump in inflation.

"We are seeing higher energy prices. Energy is a global commodity. When those prices are higher in one country, they are higher around the world. We're seeing a basic challenge that shutting down the world's economy turned out to be a much simpler process than turning the global economy back on."

But for a government that remains relentlessly focused on what it likes to call "the middle class and those working hard to join it," inflation isn't some abstract economic concept. It's making life less affordable for those very same people.

Kathy Wainberg is the owner of Pita Ikram. She has two locations, strictly take-out, in the northwest corner of Toronto. Like many small restaurateurs, she struggles to hire staff and serve a steady stream of customers.

Kathy Wainberg stands outside one of Pita Ikram's locations in Toronto. (Kathy Wainberg / SUBMITTED)

A few months ago, she put up a notice letting customers know the prices of their favourite shawarma meals were going up by about 20 per cent.

"Things like oil that we use for frying food have, like, tripled in price," she told The House. "We waited to raise prices for as long as we possibly could … but in the restaurant industry, the margins are razor thin, so we were unable to absorb maybe as much of the costs as the customer would have liked to have seen."

It's stories like these that make inflation a convenient target for any opposition politician intent on linking government policy to rising prices.

Conservative MP Pierre Poilievre has been leading the charge on inflation for his party. (Sean Kilpatrick/The Canadian Press)

Conservative finance critic Pierre Poilievre led the opposition charge this week. He accused the Liberal government of wanton spending, saying inflation is worse in this country than most other democratic countries because, like the United States, the Liberals have been "printing money to pay their bills" instead of controlling spending.

"The cost of government is driving up the cost of living. Almost a half a trillion dollars of inflationist Liberal deficits mean more dollars chasing fewer goods, driving higher prices," he said.

Poilievre is one of those politicians who can boil down complicated issues like fiscal policy into easily-understood soundbites, packaged with claims that Prime Minister Justin Trudeau is entirely out of touch with Canadians' lives.

"The prime minister says he doesn't think much about monetary policy," he said. "That's no surprise. After all, it's 'Justin-flation.'"

But economist Trevor Tombe of the University of Calgary said Poilievre is stretching the data by suggesting inflation is worse in Canada than in places like Switzerland.

"I can cherry-pick countries, too. Israel has among the highest rates of money supply growth in the developed world, but among the lowest rates of inflation," he said.

"So overall, across all developed economies, there really isn't a strong relationship between the money supply growth and observed inflation."

Economist Armine Yalnizian acknowledges the Liberals aren't immune to the political impact of rising prices, even if the inflation rate now is more of a short-term spike than a long-term trend.

"Of course the Liberals are vulnerable to people feeling like they're losing purchasing power," she said.


Chris Hall

Former National Affairs Editor

Now retired, Chris Hall was the CBC's national affairs editor and host of The House on CBC Radio, based in the Parliamentary Bureau in Ottawa. He began his reporting career with the Ottawa Citizen before moving to CBC Radio in 1992, where he worked as a national radio reporter in Toronto, Halifax and St. John's. He returned to Ottawa and the Hill in 1998.

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