The coronavirus pandemic contributed significantly to the current economic crisis in Canada. High inflation pushed companies out of business, and thousands of Canadians lost their jobs. However, the country’s economy recovered faster from the pandemic than many observers predicted.
The wage growth was back to the pre-pandemic level, and the unemployment rate by 2021 was at an all-time low. Unfortunately, a war broke out in Ukraine, reversing all the gains.
The inflation in Canada has constricted family budgets and increased business operational costs. Economic experts warn that the inflation in Canada may reach a self-sustaining level if the war in Ukraine doesn’t end soon enough. Canadians on fixed or low income are the worst hit by inflation.
You probably wonder what could have led to the high inflation in Canada despite a promising recovery from the pandemic. Here are three causes of the high inflation in the country.
Soaring Prices Of Basic Commodities
The Bank of Canada has identified the excessive demand for products as the primary driving factor for the soaring inflation. There’s a high demand for essential food products from the international market. Canada depends on the global market for essential commodities such as gas and cooking oil. Ukraine is the primary exporter of corn and sunflower oil in the international market.
However, the ongoing war in Ukraine disrupted the supply chain of these basic commodities. The disruption led to an increase in demand and price.
Canadians have contributed to inflation by purchasing highly-priced basic commodities. Sadly, inflation becomes ingrained when it feeds on itself; this is the situation in the country. The price of essential commodities increases because of the rising manufacturing and supply chain costs.
The Bank of Canada must take proactive steps before inflation becomes self-fulfilling. Businesses and households expect the prices of commodities to keep soaring. And they behave accordingly.
Disruptions In The Global Supply Chain
Global economies thrive through interdependency. But the coronavirus pandemic disrupted the global supply chain. In response, the demand for essential products soared. The unpredictable global marketplace caused the high demand, and Canadians responded by increasing their spending on basic commodities.
Similarly, companies used debt to secure enough raw materials from global suppliers. The war in Ukraine exacerbated the demand for products in the international market. Low demand for the Canadian dollar in foreign exchange further increased inflation. Since domestic markets lack direct control over internationally traded goods, inflation in Canada became inevitable.
The Need To Balance Trade-Offs
When inflation increased in 2021, the Bank of Canada decided to raise the interest rate for a short duration. This strategy cushioned the country from inflation shocks across the border. The principle behind it was that international inflation would subside over time. However, this was a short-term solution designed to weigh in on trade-offs.
Apart from absorbing global shock, the Bank of Canada hoped the monetary policy would restore jobs lost during the pandemic.
Unfortunately, disruptions in the supply chain and the war in Ukraine have lasted longer than expected. No one knows when the war in Ukraine will end; therefore, the global supply chain remains unpredictable.
Intervention Strategy
According to the Bank of Canada, the inflation may be too high but hasn’t reached the self-fulfilling stage. Therefore, it’s easier to bring it down at this stage before it peaks at an unsustainable level. The Bank of Canada has responded to frenzy spending by increasing lending rates in March 2022. It has increased the interest rates to curb inflation in four ways:
Discourage borrowing: The move will prevent Canadians from excessive and uninformed spending behaviour.
Encourage saving: The high-interest rates will encourage Canadians to save their money, thus stabilizing inflation and stimulating economic growth.
Increase the value of the Canadian dollar: The move will help reduce the demand for the American dollar in the country which is required for international purchasing.
Reduce the demand for products and services: The demand for goods and services is responsible for inflation in Canada. The Bank of Canada hopes to minimize the demand for goods by reducing the currency in circulation
Conclusion
The war in Ukraine is primarily responsible for Canada’s current inflation. Unfortunately, cross-border wars are unpredictable. There’s no way to predict when the war will end. Therefore, it’s difficult to tell when Ukraine shall recover from the war and stabilize its trade activities with Canada.
However, the Bank of Canada can take several proactive measures to minimize inflation before it peaks at an entrenched level. There could be risks of plunging the economy into depression. However, when monetary policies such as increasing the lending rates take effect, the Bank of Canada can tame inflation to manageable levels without hurting the economy.
PALM BEACH, Fla. (AP) — Donald Trump is refusing to say how he voted on Florida’s abortion measure — and getting testy about it.
The former president was asked twice after casting his ballot in Palm Beach, Florida, on Tuesday about a question that the state’s voters are considering. If approved, it would prevent state lawmakers from passing any law that penalizes, prohibits, delays or restricts abortion until fetal viability — which doctors say is sometime after 21 weeks.
If it’s rejected, the state’s restrictive six-week abortion law would stand.
The first time he was asked, Trump avoided answering. He said instead of the issue that he did “a great job bringing it back to the states.” That was a reference to the former president having appointed three conservative justices to the U.S. Supreme Court who helped overturn the landmark Roe v. Wade decision in 2022.
Pressed a second time, Trump snapped at a reporter, saying “you should stop talking about it.”
Trump had previously indicated that he would back the measure — but then changed his mind and said he would vote against it.
In August, Trump said he thought Florida’s ban was a mistake, saying on Fox News Channel, “I think six weeks, you need more time.” But then he said, “at the same time, the Democrats are radical” while repeating false claims he has frequently made about late-term abortions.
In addition to Florida, voters in eight other states are deciding whether their state constitutions should guarantee a right to abortion, weighing ballot measures that are expected to spur turnout for a range of crucial races.
Passing certain amendments in Arizona, Missouri, Nebraska and South Dakota likely would lead to undoing bans or restrictions that currently block varying levels of abortion access to more than 7 million women of childbearing age who live in those states.
NEW YORK (AP) — In a new video posted early Election Day, Beyoncé channels Pamela Anderson in the television program “Baywatch” – red one-piece swimsuit and all – and asks viewers to vote.
In the two-and-a-half-minute clip, set to most of “Bodyguard,” a four-minute cut from her 2024 country album “Cowboy Carter,” Beyoncé cosplays as Anderson’s character before concluding with a simple message, written in white text: “Happy Beylloween,” followed by “Vote.”
At a rally for Donald Trump in Pittsburgh on Monday night, the former president spoke dismissively about Beyoncé’s appearance at a Kamala Harris rally in Houston in October, drawing boos for the megastar from his supporters.
“Beyoncé would come in. Everyone’s expecting a couple of songs. There were no songs. There was no happiness,” Trump said.
She did not perform — unlike in 2016, when she performed at a presidential campaign rally for Hillary Clinton in Cleveland – but she endorsed Harris and gave a moving speech, initially joined onstage by her Destiny’s Child bandmate Kelly Rowland.
“I’m not here as a celebrity, I’m not here as a politician. I’m here as a mother,” Beyoncé said.
“A mother who cares deeply about the world my children and all of our children live in, a world where we have the freedom to control our bodies, a world where we’re not divided,” she said at the rally in Houston, her hometown.
“Imagine our daughters growing up seeing what’s possible with no ceilings, no limitations,” she continued. “We must vote, and we need you.”
Harris used the song in July during her first official public appearance as a presidential candidate at her campaign headquarters in Delaware. That same month, Beyoncé’s mother, Tina Knowles, publicly endorsed Harris for president.
Beyoncé gave permission to Harris to use the song, a campaign official who was granted anonymity to discuss private campaign operations confirmed to The Associated Press.
Prime Minister Justin Trudeau, NDP Leader Jagmeet Singh and Green Party Leader Elizabeth May pay tribute to the life of Murray Sinclair, former judge, senator and chair of the Truth and Reconciliation Commission. Sinclair died November 4, 2024 at the age of 73. (Nov. 4, 2024)
