Inflation hit a record high in Canada, at 6.8% in April. Behind the figures, it is humans who suffer the consequences. But the price hike is not hurting everyone equally. Fourth in a series of portraits of the faces of inflation.
Dominique and Anthony Gentilcore live in a large gray stone house with two garage doors built on the edge of a small lake in a peaceful and comfortable area of Terrebonne, just under an hour from downtown Montreal when you doesn’t encounter too much roadwork or traffic. Their residential complex of curving streets and roundabouts had its heyday when one of the first seasons of the reality show Double occupation came to install its candidates literally two doors down from their homes.
Glasses, petite, lively and bobbed hair, Dominique has been a retired actuary for four years. Glasses, tall, direct and spontaneous, Anthony is the head of a twenty-something IT company, and he had begun his transfer of ownership and phased retirement by the time the COVID-19 pandemic hit. “Let’s say that we know how to count, both”, sums up Dominique.
When the Legault government announced in early spring that it would give $500 to all Quebec adults earning less than $100,000 a year to compensate for the sharp rise in the cost of living, Anthony did not feel concerned. . Like its 58e As his birthday approached, he joined the “Share your 500” movement on social media and invited his friends to do the same by donating to Pleins Rays, an organization that helps young adults with intellectual disabilities or autism spectrum.
“I have to be honest. Personally, I was not entitled to the $500. In reality, it was my wife’s $500 that I split,” Anthony laughs. “I don’t know anyone who doesn’t like receiving free money, but when I looked at our situation and that of my circle of friends, I thought it would be a great opportunity to give to a good cause. »
Unequal to inflation
In Quebec, 6.7% of taxpayers earned a total of more than $100,000 per year in 2017, according to the most recent portrait of the situation drawn up by the Chair in taxation and public finance at the University of Sherbrooke. Just under a quarter (23.5%) had an income of $50,000 to $100,000, almost the same proportion (23.3%) an income of $30,000 to $50,000, while 14.5% earned between $20,000 and $30,000 and almost a third (32%), less than $20,000 per year.
However, inflation does not have the same repercussions depending on income levels and lifestyle, say the experts. Low-income households spend proportionally more on essential goods that are difficult to compress, such as food, housing and transport. Affluent households consume proportionally more services—such as restaurant meals, cultural outings and travel—which have generally been less affected by inflation in recent months and have more room for discretionary spending that allows them to save and adapt to circumstances.
“Spoiled by life”
According to Statistics Canada’s Personal Inflation Rate Calculator, the cost of living increased by 5.6% for Dominique and Anthony between April 2021 and April 2022, slightly less than the Quebec average (6.8% ).
Anthony has been budgeting since he was 16. He can thus say that groceries cost $1,500 more this year, even though the couple eat less meat than before and their two grown children no longer live at home. “We waste less food too since I retired and we’re more at home, because we have more time to cook our meals,” explains Dominique. “But we can’t really say that we changed our eating habits because of inflation. We didn’t eat lobster this year because it was too expensive, just like everyone else. I also made the jump the other day when I realized I had $14 worth of sour grapes. It is sure that we will eat less. »
Since the pandemic, Anthony’s clients more naturally accept that he does not borrow his car every time to meet them and that certain meetings are instead held on videoconferencing platforms. “We were already working remotely a lot in our company before the pandemic. It suits me, because I don’t get used to the idea of gasoline at $2 a litre. »
Since the house is now paid for, interest rate increases are not a problem either, and the rise in house prices is even good news. However, this may be another pair of sleeves for children.
“Unlike us, they don’t know what it is, high interest rates and high inflation,” said the father, who was painting in his daughter’s new condo a few days earlier. “I had advised him to take a five-year closed mortgage. »
Dominique and Anthony don’t worry too much about their children either. A computer expert like his father, their son, who is 31, should never have too much trouble finding a good job, while his sister, 29, is starting a career as a doctor.
“Whatever your income, you always feel concerned when everything around you starts to cost more,” says Anthony. The important question is: do you have the financial capacity to adapt to it? We have been spoiled by life. »
A shadow on retirement
For Dominique and Anthony, the main concern of the recent jump in inflation is its impact on their expenses and income in retirement. Until then, most experts’ retirement scenarios had assumed annual inflation of 2% and investment returns of 4% to 4.5%, for a net gain of just over 2% per year. Anthony explains. “Today inflation is over 6%, and if you know where I can find an 8.5% return, tell me where!” Dominique is already retired, so we’re going to have to adapt, but I tell myself that I might be better off waiting a little longer before taking full retirement. »
The decision is all the more delicate as with the rise in their interest rates, the central banks could well end up plunging the economies into recession and bringing down the price of houses, continues this enthusiast of figures and economy. “In our case, it is by bringing all this stress and all this uncertainty to our retirement that inflation affects us the most. We talk about it every day. Do not be mistaken. »