Every Wednesday, our parliamentary correspondent in Ottawa Marie Vastel analyzes a federal political issue to help you better understand it.
The Conservatives have decided to make inflation their main hobbyhorse, as Canadians see week after week that their grocery cart costs a lot more than before. The deputy Pierre Poilievre goes there with repeated criticisms and verbal swelling to blame the government. According to the polls, public opinion supports him in bombarding the Liberals with questions on the subject. Whether the Conservatives’ criticisms are justified or not, the government will obviously have to take into account this growing public concern.
Of the 232 questions that elected Conservatives have asked the Trudeau government in the Commons for two weeks, more than a third related to inflation, the cost of living or monetary policy (86 questions). The Liberals have spent too much to get the economy going, they scoff. Aid programs during the pandemic have been too generous. The deficits are too big.
To this, the government retorts that current inflation is global, caused by rising oil prices and multiple breakdowns in the planet’s supply chains.
An analysis shared in large part by economists. But that does not reassure Canadian taxpayers, 78% of whom said they were worried about rising consumer prices, according to a recent Ipsos poll. What is more, 36% of respondents to a probe from the firm Nanos confided that inflation was at the forefront of their concerns, ahead of climate change (30%) and even the pandemic (29%).
The cost of living was already a priority for all federal parties during the election campaign. The continued rise in the Consumer Price Index, which reached a new 18-year high in October, has amplified the importance of the issue. And convince the Conservatives to hit that nail again and again.
Numbers as ammunition
Pierre Poilievre therefore speaks daily about “Justinflation” – a play on words with the first name of the Prime Minister in English, which rolls on social networks and that his colleagues take up cheerfully in the Commons.
The member argues that Canada’s inflation rate, at 4.7%, is drastically higher than that of allied countries. It stands at 2.6% in France, 3% in Italy and 0.1% in Japan, according to the latest data from the OECD. But it is higher in the United States and Germany, at 6%, and hit a record 4.9% in the eurozone in November.
The Conservatives also cite the rise in the price of certain consumer goods: that of gasoline at the pump – which rose 42% in October compared to a year earlier – or of meat at the grocery store – which increased by 14% for beef and 20% for bacon.
“These are components whose prices are increasing a lot, so this somewhat amplifies the perception that inflation is very high,” notes Benoit P. Durocher, senior economist at Desjardins Group.
Kevin Milligan, professor of economics at the University of British Columbia, also observes a sorting of data brandished by the opposition. “There is a bit of theater, which is perhaps normal in Parliament. But the facts clearly show that Canada is experiencing increased inflation, ”he confirms.
However, although the Conservatives hammer home day after day that the government is responsible, economists add this nuance: it is rather the global context and the pandemic that are the main cause.
Federal assistance programs intended for taxpayers and businesses have certainly contributed to the vitality of demand during the economic recovery, to which supply has failed to meet. Serge Coulombe, professor emeritus of economics at the University of Ottawa, notes that Canada and the United States have offered the most generous stimulus packages and now have some of the highest inflation rates.
But the Bank of Canada recently observed that of the 4.7% increase in the Consumer Price Index, four percentage points are attributable to rising energy prices and supply constraints.
What is more, “economically, these measures were necessary” to keep Canadians afloat, observes Benoit P. Durocher. The employment rate in Canada, which has almost reached that before the pandemic, also suggests that aid programs have fostered a faster recovery, admits Coulombe.
A population that listens
Whatever the nuances, the Conservatives are well aware of the potential of this vein and the echo it finds within the public.
The Liberals say they are taking the situation seriously as well. Deputy Premier and Minister of Finance Chrystia Freeland recalls their national $ 10 child care program and affordable housing promises. His economic update next week may include other, shorter-term measures to help the less well-off cope with rising prices, such as the Quebec government’s mini-budget. But we have to see if such aid would further weaken the economy, notes Mr. Milligan.
Benoit P. Durocher believes that everyone should give the Bank of Canada time to manage the situation. “It’s not the government’s job to worry about inflation. This is the main objective of the Bank of Canada. “
However, not all Canadians are well-educated in economics and may be more convinced by the Conservatives ‘political bluster than by the experts’ plea for calm. What Mme Freeland will not be able to ignore, with the approach of the Holidays and family dinners which will bring together diners worried about the price of these meals, higher this year.