IS OUR INFLATION RATE REALLY 1-2%?
We all know that things have become very expensive in Canada since announcing of minimum wage increase followed by Liberal fools’ carbon tax. Bread prices have gone up by 100-200 % in last 2 years. Vegetable prices have increased by 200-300%. Fruit has gone up by 200-300% (the 99 cents a pound apple is being sold for $2.99 a pound). Peeled garlic has gone up from 99cents to 2.49 a pack. The onion bag has gone up from $4.99 to $9.99. The raw fish has doubled in price. Car oil change price has increased by 100%. Roofing prices have tripled. Plyboard sheets and lumber have doubled in price. Snow removal and lawn maintenance prices have gone up by 100%. The McDonald prices have doubled. The Tims coffee has gone up. The rents have almost doubled. Beer, Whisky & cigarettes have doubled in price. College and University fees have doubled. Water and electricity rate have gone so high. Netflix doubled its monthly price from 7.99 to 12.99
Staples more than doubled its price for photocopying from 5 cents to 12 cents a page
Lowes raised its 20w incandescent bulb pack from 3.99 in 2017 to 5.99 in 2018
Home Depot raised its price of wax paper for hardwood from $37 to $56 a roll in 2019
These are day to day prices salaried Canadians have to confront without a matching increase in wages of salaried employees. No doubt minimum wage increased for casual labor but existing employees had no increase at all in their wages.
The government has found a convenient way to fool the Canadians by publishing ongoing inflation data. Surprisingly, both Liberals and Conservatives have kept a lid on this method. Stats Canada, an arm of the Government, has chosen a basket of goods and services to calculate inflation or Consumer Price Index (CPI). Inflation data is published by Stats Canada based on some well-defined formula. The formula is as follows:
There are hundreds of items in the chosen basket of goods, giving each category proportionate weighting. Starting from Food at 17% of basket (basic bread, meat, vegetables, fruit, milk, eggs, juice, nuts, frozen food, bakery, …), shelter 27% (rent, property tax, mortgage cost, property insurance, maintenance, water fuel and electricity ), Household operations, furnishings & equipment 13% (bed, sofa, fridge, stove,, computer, phone, internet, child care, pet food, detergents, laundry machines, …), Clothing & footwear 6% (women, men and children clothing, jewelry, laundry services, dry cleaning service , … ) , Transportation 19% (TTC, air fare, bus fare, operating car purchase or leasing, gas price, parking fees, vehicle maintenance and oil changes, driver’s license and vehicle sticker, …), Health & Personal Care 5% (eye care, medicines, beauty products, dental care, hygiene products, ….), Recreation, Education & Reading 11% (Leisure skiing, sports, sporting equipment, audio/video equipment, travel services, travel tours, cable, TV, facilities fees, University, college tuition costs, books, stationery, ….), Alcoholic beverages & Tobacco products 3% (cigarettes, whisky, beer, spirits from stores, alcohol in bars, , …..). The composition of basket and actual weight of items is discretionary and keeps changing every 4 years on whims of economists calculating Consumer Price Index (CPI) or Inflation. The above basket is not whole and may not add up to 100% but just a representative basket based on 2013 consumer spending habits to explain the concept.
The index is calculated in relation to index as of 1982-84 which was set at 100.
Here is the kicker. The Canadian CPI does not actually tell us if things have become expensive or not. It just tells us changing habits of Canadians, hence is a tool to fool Canadians. For example, if apples price has gone up from 99 cents a pound to $2.99 a pound (300% increase) or a bag of walnut has gone up from $12 to $26 (200% increase), consumers will start switching to other less expensive items or if basic bread price has gone up from $2 a loaf to $5 a loaf (250% price increase), consumers will switch to Pita bread to afford breakfast. So the economists will modify the basket of food items accordingly, not telling Canadians that most items have really become expensive and are unaffordable. Likewise rents have doubled. Just basement rent has doubled up from $700-850 range to $1500-1700 range (100% increase). So next time you may see commune living as part of shelter cost because people can’t afford basement rent. Is it all not misleading??? If fish has gone up from $2 a pound to $6 a pound, Canadians will stop eating fish and it will get dropped from CPI basket next time. Just the household cleaning services are costing $30-40 an hour compared to $10-12 an hour 2 years ago(a 300% increase) because of minimum wage increase. So people have stopped employing cleaning ladies because they cannot afford to. The fact is everything has become way expensive yet economists say annual inflation is only 2.4%. We used to be able to need $3000 to survive. Now an average home needs at least $6,000-10,000 after tax cash to survive. A middle class household spends around $1200-$1400 a month on food for family of four compared to $400 a month few years ago. So actually the food and toiletries are taking up 40% of single household income. Why?
The Canadian concept of inflation hides the truth and omits items at free will. It shows to the economists (and not to the citizens) that average Canadians cannot afford to buy bread, walnuts, apples, fish, coffee, burger, with their income because they have become expensive. Normal people are only told Canada’s inflation increased by 1-3% year over year.
Politicians need to focus on prices rather than fooling Canadians that we have only 2-2.4% annual inflation in Canada. The fact is we have 60% annual inflation in Canada because more and more people can’t buy the food and things they used to buy.