Canadians weary after years of brutal inflation

The last four-plus years have been a rollercoaster for millions of Canadians. The pandemic, which began in early 2020, quickly led to mass layoffs (most temporary) and widespread disruptions to normal life. This was accompanied by hiccups in often-fragile global supply chains, subsequently aggravated by the Russia-Ukraine war. In response to these developments, governments and central banks provided unprecedented amounts of fiscal and monetary “stimulus” over the course of 2020-21.

All of this set the stage for skyrocketing inflation and a cost-of-living crisis in many countries. As in most peer jurisdictions, inflation and living costs jumped in Canada, beginning in late-2021 and accelerating throughout 2022. Faced with the highest inflation in four decades, the Bank of Canada belatedly responded with dramatic interest rate hikes in 2022 and the first half of 2023. The central bank’s abrupt shift to a restrictive monetary policy pummelled the economy by dampening private-sector spending and real estate activity. Economic growth slowed to a crawl in 2023 and has continued to lag in 2024. The labour market has also softened, with job growth slowing and the unemployment rate rising.

The good news is that victory is in sight for the Bank of Canada’s quest to bring inflation back to its official 2 per cent target. In recent months, year-over-year increases in the overall Consumer Price Index (CPI), which measures prices for goods and services, have been running comfortably below 3 per cent compared to close to 7 per cent a couple of years ago, and inflation slowed to 2.5 per cent in July. With inflation mostly tamed, the central bank has started to lower its short-term policy interest rate, from 5 per cent in May 2024 to 4.5 per cent today. Further cuts are expected.

It’s worth summarizing how the inflation “scare” has affected the prices Canadians now pay for goods and services.

From January 2020 to June 2024, cumulative inflation amounted to 18 per cent. This captures the combined increase in prices for the hundreds of individual items in the CPI. The price of “shelter” has risen faster than prices in general. Since January 2020, the shelter component of the CPI has climbed by one-quarter. Shelter costs include rents, mortgage payments, residential fuel, electricity and water charges.

Food prices have also been on a tear. Since January 2020, the food component of the Consumer Price Index has increased by 24 per cent. According to the latest Canadian inflation report, food inflation has dropped to 2.4 per cent on a year-over-year basis, but consumers are still struggling with sticker shock at the grocery store.

The cost of transportation—a category which includes gasoline—has also marched higher, up by more than one-fifth since early 2020.

It’s clear many Canadians have been hurt by the 2021-24 inflation surge. A Statistics Canada survey conducted a few months ago found that 45 per cent of respondents reported difficulty meeting day-to-day expenses, a far bigger share than two years earlier. Those on fixed incomes and younger people striving to form separate households have been hardest hit. Meanwhile, workers whose pay hasn’t kept pace with above-normal inflation have seen their purchasing power diminish. All of this has soured the public mood and put incumbent governments on the defensive.

Fortunately, the evidence suggests that inflation will soon return to the official 2 per cent target. This should ease recent cost-of-living pressures and help bolster flagging consumer and business confidence in Canada. It can’t happen soon enough.

Author:

Jock Finlayson

Senior Fellow, Fraser Institute

Related Topics:#CostOfLiving #FoodPrices #FraserInstitute #HomePrices #Inflation #InterestRate #JockFinlayson

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Canadian Energy Centre / 1 hour ago

Cross-Canada economic benefits of the proposed Northern Gateway Pipeline project

Alberta / 1 hour ago

Albertans need clarity on prime minister’s incoherent energy policy

Canadian Energy Centre

Cross-Canada economic benefits of the proposed Northern Gateway Pipeline project

Published on June 15, 2025

Todayville

From the Canadian Energy Centre

Billions in government revenue and thousands of jobs across provinces

Announced in 2006, the Northern Gateway project would have built twin pipelines between Bruderheim, Alta. and a marine terminal at Kitimat, B.C.

One pipeline would export 525,000 barrels per day of heavy oil from Alberta to tidewater markets. The other would import 193,000 barrels per day of condensate to Alberta to dilute heavy oil for pipeline transportation.

The project would have generated significant economic benefits across Canada.

The following projections are drawn from the report Public Interest Benefits of the Northern Gateway Project (Wright Mansell Research Ltd., July 2012), which was submitted as reply evidence during the regulatory process.

Financial figures have been adjusted to 2025 dollars using the Bank of Canada’s Inflation Calculator, with $1.00 in 2012 equivalent to $1.34 in 2025.

Total Government Revenue by Region

Between 2019 and 2048, a period encompassing both construction and operations, the Northern Gateway project was projected to generate the following total government revenues by region (direct, indirect and induced):

British Columbia

Provincial government revenue: $11.5 billion
Federal government revenue: $8.9 billion
Total: $20.4 billion

Alberta

Provincial government revenue: $49.4 billion
Federal government revenue: $41.5 billion
Total: $90.9 billion

Ontario

Provincial government revenue: $1.7 billion
Federal government revenue: $2.7 billion
Total: $4.4 billion

Quebec

Provincial government revenue: $746 million
Federal government revenue: $541 million
Total: $1.29 billion

Saskatchewan

Provincial government revenue: $6.9 billion
Federal government revenue: $4.4 billion
Total: $11.3 billion

Other

Provincial government revenue: $1.9 billion
Federal government revenue: $1.4 billion
Total: $3.3 billion

Canada

Provincial government revenue: $72.1 billion
Federal government revenue: $59.4 billion
Total: $131.7 billion

Annual Government Revenue by Region

Over the period 2019 and 2048, the Northern Gateway project was projected to generate the following annual government revenues by region (direct, indirect and induced):

British Columbia

Provincial government revenue: $340 million
Federal government revenue: $261 million
Total: $601 million per year

Alberta

Provincial government revenue: $1.5 billion
Federal government revenue: $1.2 billion
Total: $2.7 billion per year

Ontario

Provincial government revenue: $51 million
Federal government revenue: $79 million
Total: $130 million per year

Quebec

Provincial government revenue: $21 million
Federal government revenue: $16 million
Total: $37 million per year

Saskatchewan

Provincial government revenue: $204 million
Federal government revenue: $129 million
Total: $333 million per year

Other

Provincial government revenue: $58 million
Federal government revenue: $40 million
Total: $98 million per year

Canada

Provincial government revenue: $2.1 billion
Federal government revenue: $1.7 billion
Total: $3.8 billion per year

Employment by Region

Over the period 2019 to 2048, the Northern Gateway Pipeline was projected to generate the following direct, indirect and induced full-time equivalent (FTE) jobs by region:

British Columbia

Annual average: 7,736
Total over the period: 224,344

Alberta

Annual average: 11,798
Total over the period: 342,142

Ontario

Annual average: 3,061
Total over the period: 88,769

Quebec

Annual average: 1,003
Total over the period: 29,087

Saskatchewan

Annual average: 2,127
Total over the period: 61,683

Other

Annual average: 953
Total over the period: 27,637

Canada

Annual average: 26,678
Total over the period: 773,662

Alberta

Albertans need clarity on prime minister’s incoherent energy policy

Published on June 15, 2025

Todayville

From the Fraser Institute

By Tegan Hill

The new government under Prime Minister Mark Carney recently delivered its throne speech, which set out the government’s priorities for the coming term. Unfortunately, on energy policy, Albertans are still waiting for clarity.

Prime Minister Carney’s position on energy policy has been confusing, to say the least. On the campaign trail, he promised to keep Trudeau’s arbitrary emissions cap for the oil and gas sector, and Bill C-69 (which opponents call the “no more pipelines act”). Then, two weeks ago, he said his government will “change things at the federal level that need to be changed in order for projects to move forward,” adding he may eventually scrap both the emissions cap and Bill C-69.

His recent cabinet appointments further muddied his government’s position. On one hand, he appointed Tim Hodgson as the new minister of Energy and Natural Resources. Hodgson has called energy “Canada’s superpower” and promised to support oil and pipelines, and fix the mistrust that’s been built up over the past decade between Alberta and Ottawa. His appointment gave hope to some that Carney may have a new approach to revitalize Canada’s oil and gas sector.

On the other hand, he appointed Julie Dabrusin as the new minister of Environment and Climate Change. Dabrusin was the parliamentary secretary to the two previous environment ministers (Jonathan Wilkinson and Steven Guilbeault) who opposed several pipeline developments and were instrumental in introducing the oil and gas emissions cap, among other measures designed to restrict traditional energy development.

To confuse matters further, Guilbeault, who remains in Carney’s cabinet albeit in a diminished role, dismissed the need for additional pipeline infrastructure less than 48 hours after Carney expressed conditional support for new pipelines.

The throne speech was an opportunity to finally provide clarity to Canadians—and specifically Albertans—about the future of Canada’s energy industry. During her first meeting with Prime Minister Carney, Premier Danielle Smith outlined Alberta’s demands, which include scrapping the emissions cap, Bill C-69 and Bill C-48, which bans most oil tankers loading or unloading anywhere on British Columbia’s north coast (Smith also wants Ottawa to support an oil pipeline to B.C.’s coast). But again, the throne speech provided no clarity on any of these items. Instead, it contained vague platitudes including promises to “identify and catalyse projects of national significance” and “enable Canada to become the world’s leading energy superpower in both clean and conventional energy.”

Until the Carney government provides a clear plan to address the roadblocks facing Canada’s energy industry, private investment will remain on the sidelines, or worse, flow to other countries. Put simply, time is up. Albertans—and Canadians—need clarity. No more flip flopping and no more platitudes.