The CAQ government of François Legault may well give a gift of $500 to each of the 6.4 million taxpayers who earn less than $100,000 a year, but in the end this will only cover a fraction of the increase in the Cost of life.
By carrying out, on the website of the Ministère des Finances du Québec, various family situation simulations (person living alone, single-parent family, couple without children, couple with children, retiree living alone, retired couple, etc.), I noted that the disposable income of Quebec households in 2022 would only increase by 1 to 2% in a very large number of cases. I am talking here about “disposable income” after taxes, tax credits, social security contributions, benefits, allowances… both provincially and federally.
We are far from the annual inflation rate reported Wednesday by Statistics Canada. In March, inflation rose at an annual rate of 6.7% both in Quebec and in Canada as a whole.
Who says high inflation, necessarily says “impoverishment” of households.
Dramatic situation
Unfortunately, the most affected are first of all low-income households and then low-income households, who have no financial leeway in the face of the sharp rise in prices.
Inflationary pressures are hitting everywhere in Quebec, as prices have climbed in almost all major components of the consumer price index. Here is a range of the annual increases recorded last March:
- Gasoline: +43.5%
- Fuel oil and other fuels: +61.8%
- Transport: + 12.1%
- Housing: +5.9%
- Owner Replacement Cost: +15.7%
- Furnishings, household items: +8.9%
- In-store food: +8.1%
- Meat: +9.8%
- Bakery and cereals: + 8.7%
- Fresh fruit: +9.6%
What are the main factors that “justify” the sharp rise in the cost of living?
“The increase in prices, explains Statistics Canada, occurred in the context of sustained pressure on prices in the Canadian housing market, significant supply constraints and geopolitical conflicts (including the invasion of Ukraine by Russia), which have impacted agricultural, energy and commodity markets.”
Salary catch-up
To these inflationary factors will be added, when the collective news is renewed, possibly marked increases in wages and salaries.
In the economic outlook reported in his budget last March, the Minister of Finance, Eric Girard, predicts that wages and salaries will rise by 8.1% in 2022.
At first glance, one would be led to believe that with such an increase in income, households will be able to offset the rise in the cost of living.
The problem? If wages were ever to increase by such a level, we would have to expect that this would inevitably lead to a rise in the prices of products and services and cause inflation and interest rates to jump further.
Once again, low- and moderate-income households will suffer the most.