Dear ABMInsider,

Listening to the radio on the way to work, a couple of pundits were musing about this week’s federal budget and how it might be used to curb inflation. They talked about the merits of increased spending versus fiscal restraint as well as the difference between actually reducing inflation and making inflated goods more affordable (such as through targeted subsidies for low-income earners).

It was an important discussion, but let’s face it: most people aren’t all that interested in high level policy debates. You know what does get them riled up? Price hikes at the gas pump and the grocery store.

At a social gathering I attended last weekend, a gathering where all of the attendees were folks with steady jobs paying decent incomes, the most popular topic of conversation was rising costs at Costco. Yes, Costco, the discount warehouse whose annual membership fee gives you access to (mostly bulk) products at (usually) lower prices than their competitors. But even there, there have been notable price hikes in the past couple of weeks. A package of cheese that used to sell for $14.99 is now $16.99. A three-pack of steak? That starts at $45. Boston lettuce? Up 67%, from $2.99 to $4.99. Even a bunch of bananas is up 15%, from $1.99 to $2.29. My next-door neighbour said a cart that used to cost her $300 was now $500.

The prize, though, in our game of price comparison one-upmanship went to the restaurant owner who can’t afford to serve Caesar salad anymore. His restaurant has a lunch special where you can get pizza and your choice of side. Caesar salad, he said, is the most popular choice. It’s not a complicated salad—some lettuce, bacon, croutons, parmesan cheese and salad dressing. He said it was an affordable menu option when he used to get romaine for $50 a case at Costco. That price has tripled. And when it went up to more than $150 a case? Costco stopped selling it.

Remember, this was a group of mostly middle-class Canadians, all of them finding it difficult to cope with ever-higher prices. How are lower-income families coping? And it’s not just groceries either. Clothes. Fuel. Home heating. Housing. Everything has gone up and there’s every indication that costs will continue to rise.

The paradox of all this is that rising costs will curb spending; runaway consumerism (surging demand) is often cited as the cause of inflation in the first place.

So, will inflation ultimately right the market on its own? Should the federal budget be used to try to calm inflation? I don’t have the answers—I have my hands full trying to manage a household and a business.

 

Dawn Chafe Executive editor & co-owner dchafe@atlanticbusinessmagazine.ca