As a foreigner who follows the Canadian news I saw on https://www.ctvnews.ca/business/economists-expect-rise-in-inflation-as-price-growth-fight-enters-new-phase-1.6517322 that the Canadian inflation rate is 2.8% which surprised me as in our country it is around 7%.
If so then how did Trudeau do it? How did he soak up all the money he printed during Covid?
Does that mean that housing and cost of living pressure has also been eased?
Would like to know your thoughts.
Canada has been doing pretty decently when compared to other countries. It’s not all about pandemic spending. Challenges on the supply side have had a huge impact globally (e.g., chip shortages, production slowdowns in China, fuel prices).
If so then how did Trudeau do it? How did he soak up all the money he printed during Covid?
Oddly enough, the money was given to people who generally re-inject it into the economy. It’s not that it canceled out the expense, but a combination of allocation and a hefty amount of confidence in the reverse-trickle-down (which actually does work) effect brought the inflationary slippage within range where it was corrected within only a few years with an economy growing stronger before the shutdown.
We did a less-worse thing and also got super lucky. Comically, the Oranges would have handed out too much and damaged us for longer, and the cruel blues would have given no one anything and risked our safety to boot, so I have to admit the second-worst political party possible actually did the least-worst plan.
Also worth noting that while getting inflation under control is a good thing, people won’t feel the relief for a bit yet. Getting inflation lower doesn’t mean prices are going to drop to what they were last year, it means they’ll only go up a little this year instead of a lot. Since wages tend to lag behind cost of living, at least for the majority of the working class, it’ll be a while yet for people to settle in to their new financial situation.
The right is very quiet.
StatsCan uses an odd assortment of consumer goods to track inflation, which doesn’t really reflect what pressures consumers are facing in Canada, I’d hazard a guess it’s likely closer to 5%.
Housing and cost of living issues are very much still at the forefront of most Canadians’ mind, barring the wealthy. The federal govt has done nothing of note on either issue, and I’d posit that they’re likely to get hit pretty hard from both sides come election season. I’m personally aghast that our federal govt is willing to accept such a huge leap of unhoused Canadians while those in power sit on their hands.
StatsCan uses an odd assortment of consumer goods to track inflation, which doesn’t really reflect what pressures consumers are facing in Canada
Makes sense. Inflation only cares about the change in value of the dollar, not the sum total of the change in value of the dollar and the change in value of the good being purchased. It is decidedly not a cost of living index.
If, for the sake of illustration, the value of bacon is up 50¢ and the dollar has declined in value by 50¢, your cost to buy bacon is now up $1 – but inflation would only be interested in the 50¢ on the dollar side of the transaction. The increase in value of the bacon is irrelevant to dollar inflation.
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It doesn’t have to be all that realistic. All you are trying to determine is how the value of the currency has changed over time. Groceries tend to be especially volatile in their own value (fruits and vegetables can be less valuable during harvest, for example), which can mask the change in value on the other side of the equation. But at the same time groceries are great because everyone buys them regularly, which is exactly what you need to understand how their perception of the value of the currency is changing. Something people only buy once in their life would be completely useless. So, you seek some kind of balance in its inclusion.
It will never be perfect, but perfect need not be the enemy of good. And, in reality, economists will look at many different ways of calculating inflation when doing economisty things anyway. Headline inflation is just that – for the headlines.