As I and many others have repeatedly noted, there appears to be a yawning gap between what the government claims about the economy, and what people on the ground are actually feeling.
A big part of that gap is the cost of living, with people repeatedly questioning claims that inflation was generally around 2-3%.
It just doesn’t “feel right.”
Now, we have clear evidence of why that gap in perception and experience persists.
According to a study by economists Herb Emery and Xiaolin Guo from the University of New Brunswick, the real incomes of Canadians have declined far more than the official Consumer Price Index (CPI) indicated.
In fact, Emery and Guo dramatically state that “for many groups, post-2009 has been an economic Depression.”
The study shows that for many Canadians, including families with children, the real inflation rate has been closer to 10% in many years, dramatically higher than the rate of roughly 2% that is generally reported by the government.
The usual CPI reading reported by the government doesn’t account for the fact that many households do more driving than others, which means they are more sensitive to fluctuations in gas prices.
As Rob Carrick noted in the Globe and Mail, “This discrepancy is explained by the small weighting gas has in the overall CPI. Gas would have a bigger weighting for someone who does a lot of driving.”
By leaving out that discrepancy, the impact of rising gas prices is underreported, leading to an ‘official’ inflation rate that is far below what is actually being experienced.
As a result, more and more Canadians are falling further and further behind every year, even as the government reports figures that cover-up that reality.
This hits many middle-class and working-class Canadians the worst, as families in the suburbs, and families with children have longer commutes, have to drive more, and thus pay the price (literally) for gas price hikes.
Of course, this means it would be very easy for the federal government to help reduce the cost-of-living for middle-class Canadians:
Cut the gas tax and oppose any taxes that raise the price of energy.
It’s simple really.
But instead, the Trudeau Liberals have done the exact opposite.
They introduced a carbon tax that makes gas prices—and everything else—more expensive, which will only exacerbate the cost-of-living crisis being experienced by millions of Canadians.
Ironically, this means that the carbon tax is a direct financial betrayal of the very same people Justin Trudeau claimed he would help—middle-class Canadians and those working to join the middle-class.
Justin Trudeau and the Liberals have literally done the one thing that will make life even worse for Canadians facing high transportation costs. By making it even more expensive to fill up at the pump, and by introducing a tax designed to increase the price of gas year after year after year, the Trudeau Liberals are guaranteeing an ever-increasing inflation rate for millions of people who are already struggling.
And make no mistake, when the arrogant Liberals say the carbon tax is about “changing behaviour,” this is what they’re talking about—punishing people for needing to drive.
Clearly, the Liberals are counting on the official CPI to hide the true cost of their carbon tax betrayal, but whatever the ‘official’ stats say, we know that Canadians will feel the pain.
That’s why scrapping the carbon tax is the first step to helping Canada’s beleaguered middle-class. Until that happens, the cost-of-living crisis will only get worse.