The recent surge in prices is like a lot of other things. Not all are hit equally, and those who are hit the most are still those who earn the least.
Last I heard, the Consumer Price Index (CPI) had risen 4.7% in one year in Canada. This figure is an average established on the basis of a basket of 700 goods and services, the relative weight of which was set according to the consumption habits of Canadians. There are items that have increased in price much more, such as furniture (8.7%), meat (+ 9%), expenses related to home ownership (+ 13.3%) and gasoline (+ 43.6%), but also products whose cost has fallen, such as the mortgage interest burden (–8.3%), telephone services (–13.5%) and tour packages ( –27.1%).
However, we do not all have the same consumption habits. They vary, among other things, according to age, place of residence, size of households… and income.
In 2017, the lowest 20% of Quebec households spent, for example, 17% of their budget on food expenses, against 12.6% for the richest quintile, reported last year the Institute for Research and Development. socioeconomic information (IRIS). There were also all kinds of other small gaps, with one fifth of the poorest households also spending proportionately more of their modest resources on housing (27% versus 26.1%) and current expenditure (8.7% versus 7.5. %) than the richest 20%, but less for transport (18.3% against 19.2%), leisure (4.9% against 7.7%) or alcohol and tobacco (1, 9% against 2.9%).
More and more expensive to be poor
All these small differences mean that the total increase in the cost of living for households of two or more people from 1999 to 2019 was 29.7% for the poorest quintile, compared to only 24.8. % for households belonging to the group of the richest fifth, had calculated the IRIS researchers. But this gap would have been even greater, they explained, if the poorest did not tend to adjust their spending according to price – by eating, for example, more pasta and less meat when the latter is done more. dear – or if we had looked at the particular case of those who have recently changed accommodation.
And that was before the COVID-19 pandemic and its upward effect on prices. We know that people with modest incomes tend to devote a larger proportion of their family budget to the purchase of goods than the richest, who consume proportionately more services, underlined in the New York Times last week the former chief of economic advisers to President Obama, Austan Goolsbee. However, the price of goods increased by 6.9% on average in one year in Canada, against 2.9% for the price of services.
We also know that the richest use e-commerce platforms more than the poorest, added the economist from the University of Chicago. And the most recent data shows that prices there have risen just 3.5% in the past 12 months, almost half of the US average inflation of 6.8%.
What about the income?
It would also be necessary to compare all these trends in the cost of living with the evolution of household income. Here again, the most modest Quebec families have not had the advantage in recent years, households belonging to the poorest quintile faring, according to the Institut de la statistique du Québec, with a total increase in their income. after-tax income of 29.7% from 1999 to 2018, against an increase of 37.4% for the richest fifth.
Paradoxically, most Quebecers emerged from the pandemic with more income and net assets than they entered, the Mouvement Desjardins observed in an analysis last month. This was notably the result of soaring house prices, being forced to save by lockdown measures and special government financial assistance programs for workers affected by crisis. But inflation has erased some of these gains and this situation will not last, warned the authors of the analysis.
The experts conclude in particular that it would be necessary to better know how to take into account the inequality of households in the face of inflation. They stress, among other things, that one cannot have a fair picture of the extent of the problems of poverty if one forgets that the poor do not consume exactly the same things as the average of their fellow citizens.
In its study, IRIS suggested, for example, that governments think of the fact that the increase in prices is greater for the most modest households in the calculation of the measures intended for them, such as the solidarity credit. Conversely, one could also remember the lower inflation enjoyed by the richest when it comes to updating the threshold amount for their last tax bracket.