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Even the highest earners believe they are being overcharged for products
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Recent research from the Bank of Canada suggests that corporations did not take advantage of inflation to raise prices more than necessary. The public at large, however, isn’t so sure.
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A new survey by Modus Research, which interviewed 1,618 adults, found that a strong majority of Canadians (80 per cent) are convinced that companies are using inflation as an excuse to gouge them. This view is consistent across all income groups, with nearly three-quarters (73 per cent) of even the highest earners ($100,000+) believing that they are being overcharged for products.
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Canadians are “no doubt influenced by reports of record profits for major corporations,” the report said. “This speaks to a growing economic anxiety among Canadians at all income levels.”
Canada’s large grocery chains have attracted much of the attention and have been accused of “greedflation” as their profits rose in tandem with inflation. Just last month, Loblaw Cos. Ltd. beat analyst expectations amid high food inflation.
Canadians believe that inflation is the most urgent issue for governments to address today (95 per cent), followed by home prices (94 per cent) and the cost of rent (94 per cent), which are also inflation-related.
Many hold the government responsible for it, with nearly half (47 per cent) thinking that that the current episode of inflation is within the control of Canadian policymakers.
“Canadians think governments need to step in and do more to address it, and will not let policy makers off the hook just because inflation is a matter of the global economy,” the report said.
The federal New Democratic Party called for an investigation of “profit-driven inflation” in the grocery sector last September as members tried to pin rising food costs on grocery chain chief executives. Large grocers are continuing to defend themselves against accusations that they are taking advantage of financially pressured Canadians.
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“The math is very simple,” Loblaw chief financial officer Richard Dufresne said during last month’s earnings call. “Cost increases from big brands were well above Canada’s food inflation and our food margins declined, suggesting grocer profiteering just doesn’t add up.”
The Bank of Canada’s recent study also concluded that markup growth only accounted for less than one-tenth of inflation in 2021 and near zero in 2022.
“The fact that markup growth was not aligned with the dynamics of inflation indicates that the recent rise in inflation was driven primarily by changes in costs rather than by firms leveraging their market power to increase prices,” wrote report authors Panagiotis Bouras, Christian Bustamante, Xing Guo and Jacob Short.
Gary Sands, senior vice-president at Canadian Federation of Independent Grocers, said in an interview with the Financial Post’s Larysa Harapyn in January that the “greedflation” outcry will fade when facts are revealed. Still, it seems that the sentiment will continue, at least to some extent, among Canadian consumers.
“It’s going to be a perception that’s not easily shaken,” he said. “When more information becomes available to the public … those concerns will start to dissipate.”
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The stage is set for a comeback for BCE Inc. shares after the battered telecom giant’s dividend yield reached multi-year highs this week. BCE — one of Canada’s big three cable providers — has slumped 7.7 per cent so far in 2023 but its dividend yield rose above seven per cent this week, levels last reached during the global financial crisis and at the start of the COVID-19 pandemic in March 2020. — Bloomberg
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Tax expert Jamie Golombek examines a Canada Revenue Agency decision to deny an Alberta taxpayer late-filing relief that was sent back for review by a Federal Court judge. The judge concluded the CRA’s refusal to grant relief for the late-filed T1135s was the result of “faulty inferences” from the evidence that rendered the conclusion “unreasonable.” Find out more.
‘Greedflation’ not to blame for rising prices: Bank of Canada
Canadians regretting their mortgages amid high interest rates
Canadians taking on debt, reducing grocery expenses to travel
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Today’s Posthaste was written by Noella Ovid, with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.
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