As people talk more and more about the upcoming election, the notion about the “high cost of living” is a theme that keeps recurring, and it’s fairly interesting because it’s something that, well, doesn’t really bear out in the data. Inflation has held relatively steady for decades now, and in the past few years has remained within the target range (between one and three percent, with two percent being what they generally aim for), and was on the low side of it for a while, briefly flirted with the high side of the target range and has been back to two percent.
As part of populist rhetoric, all parties have been trying to make this a selling feature – the Conservatives with promises to cut carbon pricing (even though that has not had a significant effect on inflation or even gas prices) and the restoration of boutique tax credits (that don’t benefit low-income people), the Liberals through the Canada Child Benefit, and the NDP through promised massive spending programmes (that have zero details on implementation). So it’s worthwhile asking just what exactly they’re referring to when they rail about the high cost of living, because it can refer to specific things that have specific solutions that they may or may not be advocating.
Housing prices are one thing that are lumped into cost of living, but isn’t really, and again, that’s very dependent on which market you happen to be in. Toronto is coming back to normal after being on a housing bubble, but Vancouver is still high in part because of housing supply. Alberta and Saskatchewan are depressed because of the oil market, but other parts of the country? Not really an affordability issue, and some plans to deal with housing affordability will just drive up prices by the amount of the incentives and not deal with the structural problems (which is what the Liberals tried to circumvent with their shared equity plan in the last budget). Essentially, when the parties start talking about dealing with the “high cost of living,” we should be pushing back and asking what, specifically, they’re referring to. There is enough populist bilge out there that means nothing and promises snake oil, so unless you can get specifics, don’t trust that they will deliver anything of substance.