With less than a week before Canadians cast their ballots in the federal election, new inflation figures have given opposition conservatives fresh political impetus to use against Prime Minister Justin Trudeau’s Liberal Party.
If there’s anything that a current candidate in need of re-election does not need, it’s unwelcome news from the economic field.
But with less than a week left before Canadians cast their votes in a strict federal election race the liberal party of Prime Minister Justin Trudeau against the Conservatives led by Erin O’Toole, the latest lectures on inflation in Canada provided new fodder for the opposition.
Consumer prices rose 4.1 percent in August over the same period last year, Statistics Canada said Wednesday.
The rate of price increases, which is well above the Bank of Canada’s target of 2 percent, was stronger than many analysts expected, and was the highest annual inflation rate since March 2003.
“The numbers released today make it clear that under Justin Trudeau, Canadians are experiencing an affordable crisis,” O’Toole tweeted. “It is worrying that Justin Trudeau does not seem to care about the rising cost of living imposed on Canadians by inflation.”
The numbers released today make it clear that under Justin Trudeau, Canadians are experiencing an affordable crisis. It is worrying that Justin Trudeau apparently does not care about the rising cost of living imposed on Canadians by inflation. https://t.co/A4LDkeScZ6
– Erin O’Toole (@erinotoole) 15 September 2021
Inflation hits less affluent households the hardest because it takes up a larger share of their income, especially as prices rise for essential goods and services that cannot be bought later — such as food, fuel and shelter.
Inflation last month was largely driven by petrol and house prices. Gasoline prices rose nearly 32.5 percent, while the home replacement cost index, which reflects rising prices for new homes, rose 14.3 percent in August over the past twelve months.
Affordability for housing has become a problem with the button in this election, with rising prices reaching home ownership out of reach for first-time buyers, or forcing them to take out larger mortgages.
Price pressures have increased around the world as businesses prepare their operations en masse, causing bottlenecks for raw materials and higher shipping costs.
Statistics Canada noted in its press release that the rise in inflation last month “was mainly due to an accumulation of recent price pressures and lower price levels in 2020”.
This is what economists call ‘basic effects’, which compares current prices with last year when prices of goods and services were interrupted by constraints and other COVID-19 constraints that weakened business operations.
Like monetary policymakers in the neighboring United States, the Bank of Canada believes that the current inflationary wave is likely to be temporary.
Last week, Canada’s central bank chief Tiff Macklem said: “We still expect these factors driving inflation to be over.”
But the price pressure will not subside until the Canadians cast their ballots within five days.