Since the start of the COVID-19 pandemic, the prices of many goods have jumped sharply. From lumber to real estate to fuel, everything seems more expensive in recent months. Prices have risen so much that Canada’s annual inflation rate is now 3.7%, the highest it’s been in ten years.
Although a part of this increase is due to the pandemic, or rather to related product supply restrictions, certain government policies are also responsible for this inflationary shock. Indeed, between January 1st, 2020 and January 1st, 2021, the quantity of money in circulation almost quadrupled. The substantial expenditures and stimulus measures of the different levels of government acted like an injection of liquidity, while health measures such as social distancing and the multiple lockdowns restrained manufacturing and therefore the quantity of goods and services available. Predictably, this cash infusion increased the demand for goods and services, without a proportionate increase in supply, thus provoking a general increase in prices.
Given the role played by public spending in our rising cost of living, the government must accept responsibility for the consequences of its actions. Once and for all, the federal parties need to commit to seriously reviewing program spending growth and putting an end to temporary aid measures that are fuelling inflation. It’s time to debunk the myth that spending exorbitant sums of money is the solution to all problems. Spending like there’s no tomorrow just creates other problems.