Inflation Woes

You’re likely not the only person out there who has felt the pinch, nay, sledgehammer of inflation. Prices have gone up, exponentially. Wages have not. This is another item on the long list of things choking the working class not just in Canada, but across the globe.

Depending on who you speak to, the reasons behind this would be different. If Pierre Poilievre is to be believed, then it is Justin Trudeau, and he alone, who has done this. While Trudeau has a lot to be blamed for, the issue of Inflation is bigger than him or any one politician or party.

It is a systematic issue.

What caused Inflation? Schools of economics differ, between cost-push to demand-pull inflation. Cost-push occurs when overall prices go up due to an increase in wages and the cost of raw materials. On the other hand, Demand-Pull inflation occurs when the growing demand for products isn’t met, which in turn pushes the prices higher. The current bout of inflation has been caused by a multitude of factors, including among others, widespread droughts affecting agriculture, COVID supply chain disruptions, the over-inflated housing market, Russia’s invasion of Ukraine, and its subsequent energy crisis.

Regardless of which school of economics you adhere to, one thing is painfully clear – wages didn’t cause this, but much like everything else in capitalism, they bear the brunt of it.

For starters, wages in Canada have been at best, at a standstill for decades and have lagged behind inflation. In 2021 for example, yearly inflation hit 4.8%, but average wages were up only 2.1%. Current data confirms that inflation is at 6.8%, whereas the wage increase is only 4.1%. On top of this is the horror of rising interest rates, which actually spirals inflation further out of control, then subdue it. The only thing that rising inflation rates may have decreased slightly are housing prices, although they remain ridiculously expensive for most Canadians still. The rental market isn’t any better. Average rent in the country, for example, exceeds a staggering $2000 per month. As expected, Vancouver tops the list with costs of one- and two-bedroom units at $2,633 per month and $3,598 per month, respectively.

Despite the horrors facing the working class, corporations are enjoying record profits. Earlier this year, Cenovus announced made a profit of $1.6 billion, its biggest ever first-quarter profit. For the same period in 2021, its profit was partly $220 million.  Imperial Oil wasn’t far behind, reporting its best Q1 in 3 decades. Not to be left out, Canadian Natural Resources doubled its first-quarter profit to $3.1 billion as well and Suncor made a cool $2.95 billion, more than double the amount if made during Q1 2021.

Over at the grocery store side of things, where the working class feels the biggest day-to-day pinch, things are hardly better.

Loblaw Companies Ltd beat its best profit year by a staggering $180 million this year. This at t time, when food inflation in Canada stands at its highest level in 1981 – 11.4%.

Despite all of this, there are solutions available.

There should be a suspension of the sales tax. The sales tax hits lower-income people much harder, and suspending it would be a welcome relief to millions across the country. There also needs to a significant increase in taxation on large corporations and the super-rich, including, but not limited to windfall taxes on large corporations. The NDP, for its claims to be a party looking out for workers, needs to take a more aggressive approach instead of simply being a slightly more progressive extension of the liberals. Jagmeet Singh has advocated for an excess profit tax for a while, but it is still nowhere close to being implemented.  Furthermore, Unions also need to fight for Cost of Living Adjustments. The recent transit strike in BC settled after a Cost of Living Agreement, and it needs to be a core demand by Unions everywhere.

Workers didn’t cause the current level of inflation, and they shouldn’t be the ones at the receiving end of it either.

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