Into a Tiff
Surprise! Inflation’s no longer a problem. At least that’s what analysts were saying after the stock market rose sharply at the end of the week. New York was up more than 5 percent during the last two trading days and Toronto was up slightly less. In the U.S., in October, the consumer price index was up 7.7 percent year-over-year, marking the fourth straight month of slowdown.
In Canada, the Bank of Canada’s Tiff Macklem, our man at the inflation helm, has not quite declared an end to rate hikes, but he has found a new foe: employment. Macklem declared that the labour market is getting too hot now that unemployment has reached record lows and business is having a hard time finding workers. What will this man blame next for our economic woes? School marks?
Beyond the announced numbers, how bad is inflation for the average family? When I come home from shopping, I always throw my receipts in a drawer. I looked at my pile this week and found they stretched back to mid-August. Aha, I thought, I’ll pore through these and find gouging price increases at City Market, a Loblaws outlet where I shop. Other than some price bounce-around for seasonal apples, I found no egregious increases. In fact, I was astounded to find no increases at all!
Gas prices are down; the only place I can find day-to-day inflation is on restaurant tips. Those devices the waiter hands you to pay your bill offer a cash or percentage tip on the total. If you choose percentage, the first three choices are 18, 20, and 22 percent followed by “other.” Whatever happened to the traditional 15 percent? Maybe it’s that kind of errant manoeuvring that has driven Macklem to seek his impossible goal of 2 percent annual inflation.
I recently came across a book I read in high school: The Mayor of Casterbridge by Thomas Hardy. The price on the fly leaf was $1.40. I went to the Bank of Canada inflation calculator and found that the 1962 price would be $14 today. Since today’s bookstore is likely selling the equivalent hardcover version for twice that, I can only assume profit margins in the book business are much better than they used to be.
More relevant to the current discussion, the inflation rate from 1962 to 2022 was shown as 3.84 percent. Where does Macklem come up with his go-for-broke goal of 2 percent? Yet neither he nor anyone else is saying there won’t be a recession, now that inflation has peaked. I find inflation so mysterious that I don’t think any such conclusions are possible.