PRICE-TAG POLITICS — Canada's annual inflation rate accelerated to 5.1 percent last month to hit its fastest pace in three decades. The country’s red-hot price growth has now been above the Bank of Canada’s control range of 1 to 3 percent for 10 consecutive months. And the Conservatives have been trying for about just as long to pin the blame on Trudeau for the surging prices. The Conservatives, led by their No. 1 agitator PIERRE POILIEVRE, have also challenged Trudeau to come up with solutions to help households deal with the sharp rise in the cost of living. Trudeau’s Liberals insist they are making life more affordable for Canadians with measures they say will lower housing costs and their centerpiece program to create a national, $10-per-day child care. Powerful price growth has hit many economies, including the U.S., since the start of the pandemic. For the most part, it’s thanks to a mix of supply-chain bottlenecks and pent-up demand. But the Conservatives have also tried to pin the blame on Trudeau’s Keynesian state spending during the pandemic. With red-hot inflation projected to stick around for a while, we shouldn’t expect the politics around it to disappear either. We asked experts: How much of a political threat is Canada’s stubbornly high inflation to Justin Trudeau? SHACHI KURL, president of the Angus Reid Institute: As is often the case, the answer is, “it depends!” Unlike a lot of issues in this country, those pertaining to money stress and the family wallet cut across the political spectrum. Whether people are on the right or the left, there isn’t a significant difference in the number [of individuals] who express worry about job loss, keeping up with the cost of living, or debt levels. So, there are a couple of determinants of how much Trudeau might “wear” this issue or be threatened by it politically. The first is whether people hold the PM responsible for the kind of fiscal policy that has us in this situation with record high inflation, or whether they chalk it up to “circumstances.” On that — you will find more political delineation. Secondly, among those who hold their government and political leaders responsible — how Trudeau responds will matter. Does he seem empathetic? Is he dialed into what Canadians are experiencing? How do they have to respond by changing their consumption and spending? Can he convince Canadians he has a plan to fix it? CHRISTOPHER RAGAN, associate professor and the founding director of McGill University’s Max Bell School of Public Policy: For the last roughly 30 years, inflation has been 2 percent plus or minus a little bit, which is not zero, but it's pretty darn close to zero. And I think for most people, it's low enough to be basically ignored.… What the central bank was doing in terms of raising or lowering interest rates was an issue, but inflation itself wasn't a main-street issue. Now, we’ve got inflation…. So, 5 percent doesn't sound like a lot higher than 2 percent, right? Five percent is hardly the end of the world. But it's happening at a time when all of these supply chain disruptions are happening and there's pent-up demand and some prices are going up at 20 percent. And other prices are going up at 10 percent and so inflation has become a main-street issue… You can't ignore it because you're noticing it when you go into the grocery store. I don't think that can help any politicians. Even if Trudeau doesn't run monetary policy, and even if Trudeau and CHRYSTIA FREELAND fully respect the operational independence of the Bank of Canada, and so they hive it off to the bank, they're still running the government. They are still the most public faces of the government. Inflation hurts, so don't be surprised if that becomes a negative issue for the government. Of course, what you've seen is the political opposition trying to make hay out of this — and the truth is, it's pretty easy to make hay out of this because inflation hurts. … It will inevitably hurt the government, whether it will hurt them enough is another matter.
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