With less than a week left for Canadians to cast their votes in federal elections, the new inflation figures gave opposition conservatives new political fodder to use against Prime Minister Justin Trudeau’s Liberal Party.
If there’s one thing a sitting candidate seeking reelection doesn’t need, it’s unpleasant news from the economic front.
But with Canadians less than a week away from casting their votes in a tight federal election race pitting Prime Minister Justin Trudeau’s Liberal Party against conservatives led by Erin O’Toole, the latest readings on Canada’s inflation provided a new food for the opposition to seize. upon.
Consumer prices in August were up 4.1 percent from the same period last year, Statistics Canada said Wednesday.
That pace of price increases, which is well above the Bank of Canada’s 2 percent target rate, was stronger than many analysts expected and marked the highest annual inflation rate since March 2003.
“The figures released today make it clear that under Justin Trudeau, Canadians are experiencing an affordability crisis,” O’Toole tweeted. “It is disturbing that Justin Trudeau appears not to care about the skyrocketing cost of living that is being imposed on Canadians through inflation.”
The figures released today make clear that under Justin Trudeau, Canadians are experiencing an affordability crisis. It is worrying that Justin Trudeau seems unconcerned about the skyrocketing cost of living that is being imposed on Canadians through inflation. https://t.co/A4LDkeScZ6
– Erin O’Toole (@erinotoole) September 15, 2021
Inflation hits disadvantaged households hardest because it consumes more of their income, especially when prices skyrocket for essential goods and services that cannot be purchased at a later date, such as food, fuel and housing.
Inflation last month was largely driven by gas and housing prices. Gasoline prices rose nearly 32.5 percent, while the Home Replacement Cost Index, which reflects rising new home prices, rose 14.3 percent in August over the past twelve months.
Home affordability has become a hot topic in this election, as rising prices put home ownership further out of reach for first-time buyers or force them to take on larger mortgages.
Price pressures have been building around the world as companies scale up their operations en masse, causing raw material bottlenecks and higher shipping costs.
Statistics Canada noted in its press release that the rise in inflation last month “is primarily due to an accumulation of recent price pressures and lower price levels in 2020.”
That’s what economists call “base effects,” which compare current prices to last year when prices for goods and services were destroyed by lockdowns and other COVID-19 restrictions that undermined business activity.
Like those responsible for monetary policy in the neighboring United States, the Bank of Canada believes that the current wave of inflation is likely to be temporary.
Last week, the head of Canada’s central bank, Tiff Macklem, said: “We continue to expect these factors that drive inflation to be transitory.”
But those price pressures won’t abate before Canadians cast their votes in five days.