Thanks to Trudeau and inflation, you are poorer than you think

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You are poorer than you think.

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That's the message from a Statistics Canada report that examined the impact of inflation on family net income. The report, released Monday, showed that median family net income rose 2.5% to $60,800 in 2022.

The bad news is that inflation wiped out that amount, meaning families were worse off.

“Adjusted for an annual inflation rate of 6.8%, median after-tax family income was 4.0% lower in 2022 than in 2021,” the report said.

For younger families with a head of household aged between 25 and 34, the decline was even greater at 5.2%, while single parents in this age group saw an 8.5% drop in income in 2022. StatsCan has not yet calculated how much inflation will cost each of us in 2023.

Inflation is the invisible thief that robs each of us of our purchasing power.

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On Tuesday, StatsCan reported that inflation had cooled, rising by just 2.5% in July, more manageable than the peak of 8.1% in June 2022.

Canadians will be pleased to see inflation calm down. While most welcome this, we are also grappling with the effects of two years of higher than acceptable inflation rates.

Although StatsCan reports only 2.5% for the last month, that's still a rise in prices. Inflation began rising above the Bank of Canada's target range of 2-3% in April 2021 and only reached that range again this year.

This means Canadians are paying almost 25% more at the grocery store than they did when inflation began. A basket of groceries that cost $100 at the beginning of 2021 now costs $125.

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This is a burden on the wallet and prices will not go down again anytime soon.

In March 2021, before inflation soared, the average price of a litre of regular gasoline across Canada was $1.25, according to StatsCan. Last month, the national average price was $1.66, up 33% over the past three years.

Home rental prices in Canada are 8.5% higher than last year, which was higher than the year before.

The Trudeau government can point to how Canada is doing according to the latest study by the International Monetary Fund, the Organisation for Economic Co-operation and Development or the World Bank. It doesn't matter. Most Canadians never deal with the IMF, the OECD or the World Bank.

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What Canadians are feeling, however, is the price at the pump, the price of a loaf of bread. They are seeing that the meat, fruit and vegetables they want to put on the table every day cost more.

That's why Justin Trudeau's comment at the start of the 2021 election that he wasn't thinking about monetary policy was so insensitive. As I wrote then, not thinking about monetary policy means not thinking about the impact of government decisions on the average family budget, including spending on food and shelter.

Trudeau's runaway spending was a major factor in inflation in this country. In the midst of all this, he was warned that if he didn't get spending under control, the Bank of Canada would have to raise interest rates higher than necessary to bring inflation under control.

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That's exactly what happened.

Canadians paid more and saw their income and purchasing power fall due to inflation driven in part by Trudeau's spending policies, and then felt the impact of interest rate hikes on mortgages and lines of credit.

Given the cooling of inflation, we can now expect an interest rate cut soon.

None of this changes the fact that we have all lost purchasing power in recent years thanks to the silent thief with the aid of the Trudeau government.

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