This column by Armine Yalnizyan was originally published by the Toronto Star on Wednesday September 21, 2022. Armine is a Contributing Columnist to Toronto Star Business featured bi-weekly.
As you start planning your Thanksgiving feast, spare a thought for the millions of Canadians who are planning their meals around what foods they can’t buy, or how many meals to cut to make ends meet.
Almost six million people were food insecure last year in Canada. More than a third of them were in Ontario, where 16 per cent, or one in six households, struggle with food insecurity.
Food insecurity ranges from having to limit the essentials to doing without food entirely because of lack of money.
In Ontario in 2021, 249,000 households missed meals, reduced their intake of food or went days without eating. Ontario was the only province where more people were food insecure in 2021 than in 2020.
Count on more people going hungry this year. That’s because food is the most difficult to ignore of the three basic drivers of decades-high inflation rates: housing, gas and food.
Food has also become the most relentlessly rising cost in household budgets, up 10.8 per cent this year over 2021, the fastest pace of price growth since 1981.
Food prices represented the only significant inflation increase in the overall Consumer Price Index released on Tuesday, which fell last month to seven per cent from 7.6 per cent in July, largely because of significant declines in oil and gas prices and the purchase price of new homes.
Meat was up 6.5 per cent, but the costs of the most basic foods are soaring: milk is up 8.1 per cent, eggs 10.9 per cent, bread 15.4 per cent, cooking oils 27.7 per cent and pasta, up an eye-watering 32.4 per cent.
As a result, food bank usage has tripled in the GTA since before the pandemic, to 182,000 people a month, and the annual cost of purchasing food bank supplies is up sixfold from last year, to $13 million.
The pace of overall inflation may be moderating, but prices are still going up.
Last week the Trudeau government introduced $4.6 billion in federal aid to be spent on inflation relief until the end of 2023, almost every penny for those with low incomes.
The package includes $2.5 billion over the next six months to provide a bit of extra cash for about 11 million people currently receiving the GST tax credit, providing low-income seniors an additional $233.50, a single mom with a child $386.50 more, and a couple with two children an extra $467.
There is also a one-time $500 top up to the federal housing benefit, costing $1.2 billion and reaching 1.8 million eligible renters.
But bank economists and some fiscal conservatives have pushed back hard against these measures. As in other countries, the chattering classes have embraced a new economic theme: government efforts to fight inflation will trigger even more inflation by adding spending to the mix.
Pierre Poilievre, Canada’s new leader of the Official Opposition, chimed in, saying: “The problem with spending more money as a solution to inflation is that it simply pours more gasoline on the inflation fire.”
Where was his ire for Saskatchewan Premier Scott Moe’s $500 affordability cheques, or Ontario Premier Doug Ford and Alberta Premier Jason Kenney’s gas tax cuts?
All of these “inflation relief” measures were paid whether voters needed help or not. If anything could stimulate inflationary pressures, those measures were it.
In truth the measures are so modest (only $3.2 billion in additional spending this fiscal year, targeted to cash-strapped households) that they amount to about 0.1 per cent of nominal GDP and one per cent of current growth, hardly a tail that could wag a dog.
Timing is also a key issue. None of this new federal largesse is likely to reach households before the end of 2022 or early 2023, too late to affect the Bank of Canada’s interest rate war on inflation.
Along with the child-care fee rebate, financed by the feds and promised by the Ontario government to start in April (money that has yet to arrive in mailboxes), there’s a lot of talk but not a lot of cash flowing to households.
There’s no chance current measures will spur inflationary overspending anytime soon, and there is more trouble on the horizon this fall.
Already flour inflation in the U.S. is reported as the worst ever, with Russia’s invasion of Ukraine squeezing bakers to a new level.
Gas prices are down from the highs of the summer, but forecasts are pricing in significant increases in the coming months.
Housing demand has been suppressed for buyers due to rising interest rates, but rents keep rising as more people become or stay renters, and higher costs mean less construction of housing stock.
More people will go hungry for fear of losing their homes at a time when there is nothing more affordable on the market. Hunger makes people get sicker quicker, and our social program of last resort, health care, is itself on life support.
Over-politicization is obscuring the real — and avoidable — story of human tragedy. And sadly, there’s more to come.