For three generations, the Xs, the Ys and the Zs, inflation has all their lives been reduced to a theoretical concept vaguely mentioned in high school. It was one word among many in the stories of relatives still traumatized from having bought a house at 22% interest in the early 1980s. A phenomenon of distant poor countries.
Posted at 6:30 a.m.
Everyone was finally given a hands-on lesson on inflation.
We cannot escape it. Price increases are now part of our daily lives. They are clearly visible, irritating, disturbing too.
In fact, at the beginning of September, Léger informed us that the two greatest sources of stress for Canadians are currently their personal finances and inflation. A few days earlier, the firm EY published a press release entitled “80% of Canadians are worried about their finances in the face of the rising cost of living”.
It is not the data released Tuesday by Statistics Canada that will soothe the anxiety in the cottages.
In Quebec, the consumer price index rose 7.1% (7% in Canada) in August compared to the same period last year. Meanwhile, wages rose by 5.4%.
No need to have a baccalaureate in mathematics to understand that this difference is equivalent to a (unpleasant) drop in purchasing power.
If you’re multiplying the strategies to stretch every dollar, you’re not alone.
This is especially true in supermarkets, where prices have jumped by an appalling 10.8%, the likes of which have not been seen since 1981.
More concretely, a food basket of $200 in August 2021 now costs $221.60. In the long run, it makes a big difference in the budget.
What is worrying is that the upward trend in grocery prices is not running out of steam. On the contrary, it has been growing constantly for a year. Since you can’t stop eating, this is bad news for low-income households.
But almost everyone (75%) has changed their behavior in response to price hikes in supermarkets, according to a study from the Analytical Sciences Laboratory in Agri-Food at Dalhousie University and Caddle, released Tuesday. While some Canadians (11.5%) have been visiting dollar stores more often to buy food, others (41%) are trying to waste less food or are skipping meals altogether (7%). Vegetable gardens grew in popularity, as did rewards programs, low-cost supermarkets, flyers and coupons.
Among the 5,000 Canadians consulted at the beginning of September, no less than 24% are reducing the amount of food they buy. It is enormous ! “We pay less for the draft! We cut back on what is not essential, such as chocolate,” says Sylvain Charlebois, director of the Laboratory and expert in food distribution.
The reebee.ca site, which brings together flyers from retailers and allows you to find the best price for a specific item, also notes a series of phenomena. Starting with a marked increase in the popularity of private label products in the grocery lists that Internet users create through its platform.
Reebee also reports that internet users are less loyal to their favorite supermarket and are more often looking for discounts for basic foods like milk and eggs.
The impact of inflation in our lives does not end there.
We focus more on repairing what breaks, we buy more second-hand, we follow fashion trends less, reveals the most recent EY index of the evolution of consumer habits. Choices that have the merit of being good for the planet.
Other decisions hurt more. One in three people have withdrawn money from their savings to pay for everyday expenses. And a quarter of the population says their credit card balance has jumped, according to the Léger survey cited above. A trend also observed by Equifax.
At BMO, we find that 36% of Canadian adults have reduced their savings contributions due to the rising cost of living, while 22% have reduced their retirement savings. In other words, today’s inflation is likely to hurt in a few decades.
What is curious in all this is that the demand for vehicles remains strong. The director of the Automobile Protection Association pointed out to me a few days ago that the demand for large luxury cars had never been so strong in Quebec, despite inflation and global warming. The demand is large enough to fuel the shortages that are making headlines. When will there be an epidemic of rusty bazous on our roads?
The human is full of contradictions, with or without inflation.