The CPI figures were released yesterday morning, and the headline number has cooled from its peak, and in July was running at an annualized rate of 7.6 percent, the decrease largely being driven by lower gasoline prices. Of course, there are still plenty of other drivers that are keeping it high, some of which are things like food (largely being driven by factors like climate change), hotel stays, and airline charges. But rather than exploring what these drivers are, most of the coverage of the day was focused on the usual wailing and gnashing of teeth that prices are high and demands for the government to do something about it, which, short of wage and price controls—which don’t really work—they can’t do much about. And no, “just give everyone money” is not a solution because that drives demand further. Same as tax cuts or breaks, and in fact, increasing taxes is generally a good way to dampen inflation. Regardless, there is a real incurious narrative to this in the media, which is not surprising, unfortunately.
Further to this morning’s inflation numbers, here are the main drivers, year-over-year, and month-over-month. pic.twitter.com/yzymhHQxnD
— Dale Smith (@journo_dale) August 16, 2022
Conservatives continue to studiously ignore the actual drivers of inflation in favour of a facile narrative, and propose measures that would further stoke demand. pic.twitter.com/21M0GAIDx6
— Dale Smith (@journo_dale) August 16, 2022
Meanwhile, here is Kevin Carmichael’s hot take on the figures, while Bank of Canada governor Tiff Macklem took to the pages of the National Post to offer some reassurance that the Bank is on the case. Economist Stephen Gordon explains the data here on video. Heather Scoffield warns that even if inflation peaked there are too many factors keeping it high for some time to come. And here is a look at the StatsCan analysts who compile the inflation data.
There is a big climate dimension to these droughts, but nobody wants to talk about it and what it’s doing to food price inflation. This is a problem.
— Dale Smith (@journo_dale) August 17, 2022
Ukraine Dispatch, Day 175:
There was another explosion at an ammunition depot at a military base in Russian-occupied Crimea, and the Ukrainian government will neither confirm nor deny involvement, though they are mockingly calling it “demilitarization,” as a play on Putin’s justification for invading Ukraine.