Financial uncertainty continuing into 2023

The government continues to spend on things that are not enhancing productivity, creating jobs, and spurring growth

The year 2022 is now behind us — a year of increasing economic uncertainty. While 2022 is now behind us, the economic uncertainty is not.

Inflation continues to take a bigger chunk of everyone’s paycheques. The rising cost of food and housing is affecting everyone, particularly rural residents relying on oil or propane to heat their homes and fuel their farms.

In December, the consumer price index (CPI), Canada’s main inflation barometer, sat at 6.3 per cent. It is down from 8.1 per cent observed in June 2022, but still higher than 4.8 per cent observed in December 2021.

Groceries rose 11 per cent year over year. Notable food price increases include non-alcoholic beverages (up 16.6 per cent), bakery products (up 13.5 per cent), coffee and tea (up 13.2 per cent), and fresh vegetables (up 13.6 per cent).

Housing remains expensive for renters and homeowners. Statistics Canada’s rent index rose by 5.8 per cent in December. The agency’s mortgage interest cost index rose 18 per cent in December following a 14.5 per cent increase in November. Canadians’ paycheques are increasingly being eaten up by inflation.

The Bank of Canada, operating at arm’s length from government, has been fighting inflation with interest rate increases. The Bank has indicated that rates will continue to rise into 2023.

While the Bank of Canada is playing its monetary role to quell inflation, a meaningful fiscal response by the federal government has been missing. The government continues to spend on things that are not enhancing productivity, creating jobs, and spurring growth.

The Organization for Economic Co-operation and Development (OECD) has predicted that Canada will have per capita GDP growth of only 0.7 per cent between 2020 and 2030, putting us dead last among advanced countries. It’s also predicted that Canada will have the weakest real per capita GDP growth among all advanced countries between 2030 and 2060.

That is a damning indictment of the economic policies of the federal government.

The government has shown no concern about this alarming data, which means Canada is on track for a declining standard of living relative to other countries. One would have expected that the Trudeau government would be focused on addressing this.

The federal government needs to do better or be replaced by a government that will.