Atlantic Chamber Says Inflation Will Hurt Businesses And Consumers
HALIFAX – The cost of living in Canada is getting more expensive each month, and the Atlantic Chamber of Commerce is worried about how costly it’s becoming to do business in the region.
According to a recent report by Statistics Canada, the consumer price index rose 4.1 percent in August, year-over-year, with nearly every category of goods and services, from transportation to food and durable goods, inflating in price. This has been the highest inflation Canada has seen since March of 2003.
“It’s going to make the costs of doing business more expensive,” says Brandon Ellis, a senior manager of policy with the Chamber. “Inflationary pressures have been running rampant throughout this pandemic.”
Ellis says consumers will end up paying more from a lot of businesses in Atlantic Canada, but most entrepreneurs will try to find efficiencies and savings first.
“Businesses are remarkably efficient. Some will have no choice but to pass the costs along to consumers, some will absorb it themselves – it depends on the industry,” said Ellis.
By far the biggest concern for the chamber is the sky-rocketing cost of fuel. According to StatsCan, the cost of fuel was more than 32 percent higher in August compared to a year prior.
Ellis notes that Atlantic Canada has a lot of rural areas that rely heavily on goods being transported a far distance before making it to market. When fuels are more expensive, it has a domino effect on everything else.
“That’s how many of the goods and services are transported,” said Ellis. “We have a highly rural geography in Atlantic Canada…I reside in Newfoundland and Labrador, where it takes a tremendous amount of time to get from one side of the province to the other.”
Another area of concern is the cost of housing. The report noted that, in August, the price of owning a new home was up more than 14 percent compared to last year. The report also made special note of the cost of rent in Nova Scotia, which was up 7.5 percent, and New Brunswick, up 8.7 percent, much higher than the average increases across Canada.
“The cost of housing has obviously been a major increase in the past year as well; so the cost of living has also gone up – everything in the economy is more expensive, essentially,” said Ellis.
Most people have probably noticed they are spending more on groceries lately. Businesses that supply food to the public have certainly taken notice too, especially when it comes to meat products, which rose nearly 7 percent.
“I’ve heard from a lot of local butchers here in the St. John’s area that beef has gone through the roof,” said Ellis.
The reason for inflation is complex and varied, but Ellis notes that inflation often goes up when a lot of money is quickly inserted into the economy, as the federal government did during the pandemic.
“That’s typically what happens when you see cheap money infused into the economy,” says Ellis. “We’re fairly concerned with the amount it’ll cost for our membership.”
“An excess of government spending; more dollars are essentially chasing fewer goods, which equals higher prices.”
With that being said, Ellis still thinks the Covid support programs were needed, even if they contributed to the inflation we are seeing now.
“I think the government spending over the last year and a half has been very necessary,” he said.
“There’s a point when the government introduces restrictions, they’re essentially mandating a recession of the economy. You can’t introduce new restrictions and have an impact on the economy without providing businesses without some influx of cash to offset that economic activity you’re affecting.”
Ellis believes it is time for the economy to stop relying so much on these programs, and for government to be careful with deficit spending.
“Moving forward into the future, we must be very proactive and prudent,” he said. “We were running fairly large deficits before we even got to the pandemic…being fiscally prudent doesn’t have to be a partisan issue.”
“In the short term, we must look at transitioning away from excessive government spending and not have too much of a tax increase, if any, to shock the economy.”
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