Browsing news and social media these days feels increasingly dystopian. News feeds present articles about Canadians cutting back on prescription medications, working two jobs, and changing their minds about having children in this economy. Wealth disparity has always existed under capitalism, but income inequality is rising rapidly, and seemingly daily. Many people point to inflation — the rising cost of goods and services alongside decreasing purchasing power — as a major culprit. While inflation plays a large role in exacerbating wealth inequality, we must also turn our attention to other institutional barriers that the Canadian government fails to address. An under-regulated housing market and costly groceries are two factors that amplify systemic poverty. It’s time we debunk the myth that addressing inflation will suddenly make all our financial problems disappear.
The Inflation Problem
Inflation is a concept that’s difficult to understand, and difficult to pinpoint a single cause for. According to the Bank of Canada, inflation typically rises when “the demand for goods and services is more than the economy supplies.” The value of inflation is assessed based on how quickly the Consumer Price Index (CPI) rises. In simple terms, the CPI compares the price of goods from one period of time to another. In a perfect world, prices change at a rate so slow it doesn’t impact spending or saving habits. The Bank of Canada refers to this as price stability. Capitalism is far from a perfect system, so there are endless factors that contribute to continuously shifting prices.
The most recent inflation surge impacting North America began in 2021, shortly after the pandemic started. In June 2022, inflation reached 8.1% in Canada — the highest it’s been since the ‘70s. Supply chain disruptions due to COVID-19 and the war in Ukraine contributed to this number, as well as a shift in spending habits; many people slowed down their use of services, and began spending more on goods hard to get by.
Definitions aside, there are significant reasons why inflation is frequently on the minds of citizens, economists, and policymakers. Few people can keep up with the current pace of inflation, which directly affects their purchasing power and ability to save money. It also impacts less “essential” services in industries like beauty and recreation, which puts people out of jobs. Combating inflation seems like the most reasonable solution to the rising cost of living — right? Unfortunately, it’s not that simple.
Typically, policymakers increase taxes and interest rates in attempts to reduce inflation. This can help, but it only goes so far. In an age ripe with global humanitarian and environmental crises, stagnant wages, and corporate greed, lowering inflation won’t do enough to address rampant systemic inequalities.
Beyond Inflation
There are more than a few industries seeing costs rise faster than the rate of inflation, which is concerning. In Canada, the price of groceries has risen to around 31% depending on the item. Food banks have been seeing record numbers of visitors as a result. According to CTV News, they’ve seen a 35% increase since March 2019. Lowering inflation wouldn’t necessarily alleviate the burden of expensive groceries, nor would it address the fact that wages aren’t increasing enough to meet our daily needs.
There are a few actions the government should take to assist with grocery prices, though there is no “easy fix.” According to CTV News, the NDP is urging the Canadian government to “recognize that corporate greed is a significant driver of inflation.” This is a crucial recognition, as food is essential to survival. Grocery prices shouldn’t be rising at a higher rate than inflation. The NDP is urging CEOs and corporations to pay their fair share by “closing tax loopholes.” They also called for an “affordable and fair food strategy.”
It’s safe to say that we should have better public resources for people in need of groceries. Charity-based organizations like food banks are important, but they’re not enough to ease the pressure of rising food prices. Beyond that, they’re certainly not a long-term solution for the country. The head of the International Monetary Fund (IMF) told BBC that governments should subsidize food and energy costs for low income individuals. Doing so would alleviate the stress of living paycheck to paycheck to cover grocery bills, and reduce the need for food banks, many of which offer limited food options with poor nutritional value.
The Housing Crisis
The housing market is another domainsystem with numbers that don’t reflect the rate of inflation. Prices have risen 318% since 2000, with fewer people being able to purchase or even rent homes these days. CBC News mentions that a “slowdown in new housing construction,” which started in 1970, “left Canada with far fewer homes per resident than the G7 average.” A shortage of housing isn’t the only problem, though. The average rental cost across Canada sits just above $2,000, with landlords contributing to highly inflated prices.
The commodification of something as essential as housing is disturbing. Large-scale investors like corporate landlords play a large role in Canada’s rental market crisis. These entities purchase large amounts of properties and monopolize the market. CBC News notes that 20–30% of Canada’s rental housing is owned by “institutional landlords,” and 200,000 units across the country are owned by “real estate investment trusts.” These investors often buy and trade housing in the stock market. Often, rent increases made by landlords fall under the realm of price gouging. While landlords can only increase rent alongside the rate of inflation for existing renters, they’re allowed to hike prices up further when tenants move out. For instance, rent increased 18% last year for new tenants — more than double the rate of inflation at its most recent peak. Without stricter rent control measures, affordable housing is a reality that few renters can experience.
Evidently, the Canadian government has plenty of work to do regarding housing and rent control. The privatization of housing means profit will continually be prioritized over individuals’ well-being. Canada needs to limit the amount of properties investors can own, and funnel government dollars into social housing. There’s no easy way around this — the country needs more housing, and that housing should not fall into the hands of corporate investors going forward. This would be a huge step towards providing for those without houses, and securing the futures of young people who are unable to afford rent. We shouldn’t have to spend all our income keeping roofs over our heads.
Research has found that affordable housing improves employment opportunities by giving people the opportunity to attend or return to school, thus developing their careers. It also allows for economic growth by granting residents disposable income to spend on goods and services.
There’s no easy solution when it comes to the alarming cost of living in 2023. Inflation rises and falls; even if the government manages to “fix” inflation or it naturally decreases, there are lingering systemic disparities that can’t be overlooked. Addressing the food and housing crises will remarkably alleviate financial strains exacerbated by inflation. No one should have to skip meals or spend their entire income on housing themselves.