Some economic topics are likely to arise during your holiday meals: the cost of groceries, high rents, paying off the mortgage, buying a car… We will say that “everything costs more” in this moment. Yes, but… Here are some keys to clarifying family debates — and the avalanche of figures.
Inflation rises, but purchasing power resists
Absolutely, yes, many things are more expensive than before the pandemic. The high inflation of recent years, measured by the consumer price index (CPI), bears witness to this. Between November 2019 and November 2023, this index increased by 16.4%, or an average of approximately 4.1% per year. This is double the Bank of Canada’s target.
But when we consider the evolution of household purchasing power, that is to say when we take into account the increase in wages, the one-off aid distributed since the pandemic or even the indexation of programs government, the picture is a little different. The disposable income of a majority of households in Quebec is currently slightly above what it was in 2019… but in a few cases, it has on the contrary slightly deteriorated compared to 2020.
In short, it is a nuanced observation, drawn from a recent study by the Chair in Taxation at the University of Sherbrooke.
Still very high, the rise in grocery prices is starting to slow down
Grocery shopping has become a stressful time for many people in recent years. And for good reason: if we compare food prices in grocery stores to what they were in November 2019, we see that they have increased by 24.1%, a faster increase than that of the overall CPI (16.4%) mentioned earlier.
In recent months, there has been a slowdown. Last January, the annual price increase at the grocery store was about 11.4%, a record high. In November, it was only 4.7% – which is still very high, and still above overall inflation.
It is also possible that this affects our perception of the cost of living in general, because even if grocery store purchases constitute only a portion of the CPI, we would tend to give them a greater weight due to their frequency. Result: there is an exceptionally pronounced gap between perceived inflation and observed inflation. In the second quarter, Canadians perceived annual inflation to be around 7%, when it was actually 3.5%.
At their highest level in 20 years, interest rates remain stable
The meteoric rise in interest rates observed in recent years is percolating throughout the economy. Higher rates impact mortgages and ultimately rents. Car loans are more expensive too. The burden of student debt is increasing. Business credit costs more to repay.
In short, in a sense, rising interest rates have contributed to the increase in the cost of living in recent times… But, ultimately, the goal is to slow the momentum of inflation. The mecanic ? As borrowing becomes more expensive, it eats into our budget and we spend less. Businesses then adjust to the decreasing demand, and prices fall.
A sign that this is working, in December, the Bank of Canada did not see fit to further increase its key rate, which influences interest rates in the country. She left it unchanged at 5%. However, it is not yet time to talk about a rate cut, believes the institution. According to several economists, rates should remain stable before decreasing around the middle of next year. To be continued.
A used vehicle costs an average of $37,800 in the country
Among the consumer goods whose prices have exploded are motor vehicles. Whether new or used, their costs have catapulted in just a few years. Particularly because of disruptions in supply chains and reduced stocks following the pandemic.
What about today ? The chains are rather reestablished and prices are starting to decrease, testifies Benoit Laforce, general manager of the car sales platform AutoHebdo.net. Thus, according to data from this firm, the average price of a used vehicle fell by 2.2% between October and November of this year in Canada, while it remained stable for a new vehicle over the same period. period.
But despite this slowdown, prices remain well above what they were before the pandemic. Since November 2019, the average price of a new vehicle has increased from $46,500 to $67,500 (+45%) and that of a used vehicle, from $25,100 to $37,800 (+50%) , always according to figures from the sales platform. Enough to hurt your wallet!
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2023-12-22 15:53:26
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