Inflation and reduced choices

The next few years aren’t expected to be a good time to be poor in Alberta — not there ever was a good time to be poor in this province.

The next few years aren’t expected to be a good time to be poor in Alberta — not there ever was a good time to be poor in this province. Put it this way: the income group for whom there will be fewer — and harder — choices for daily survival is about to grow, even though right now, inflation in Alberta is the lowest in the nation.

We’ve all heard about the squeeze on the Canadian middle class in the past decade; stagnant incomes in the face of cost of living increases that kill our expectations about what being “middle class” ought to mean.

But lower middle class, meet the poor. That’s the group of people who have a lot fewer choices about how they will live their lives.

Governments can talk about tax cuts that put more money in the pockets of consumers, but these cuts never reach the pockets of the lower income brackets, and new factors on the horizon suggest the future holds a need for tighter pockets still.

One factor is the price of food. As of last month, economists were predicting an overall price increase of five to seven per cent for food in Alberta, led chiefly by the cost of grains, corn and sugar (major components of just about all the foods we buy).

If wheat, corn and sugar constituted a price index, it already reaches 40 per cent. Processors and retailers are unable to swallow that cost or take it out of their margins any longer. So we can expect smaller packages at the grocery store soon, or a substantially higher price tag on them.

The boundary between the middle and the lower classes is the ability to adapt to rising costs in one area. If grocery bills rise, we eat out a little less, or we don’t buy another pair of shoes (not hard to see why clothing and footwear is the only portion of the Canadian Price Index to show a drop in price in the past year).

But at the bottom of the income scale, restaurant meals aren’t in the budget anyway and there are no plans to buy new clothes, so a rise in the price of the food basket has to come out of something else.

Utility bills, perhaps? Just kidding.

A conference of power generators, regulators, transmission companies and consumer groups met in Banff this week and came to unanimous agreement: your electricity bills are going to double in the next decade.

That’s to pay for the new transmission lines that industry and government both say we can’t live without.

Every dire story about electricity in this province reveals a new tidbit about the state of our power industry. Apparently, we have only modest growth in consumer power demand, but an abundance of new generation to come on line — and little capacity to move it.

Draw your own conclusions about where all that new power is supposed to go. To the planned major industrial developments in the north, we’re told. But the new power lines head south, don’t they?

At any rate, doubling the cost of power in 10 years will be enough to persuade new industries to build elsewhere, says Colette Chekerda, executive director of Alberta Direct Connect and a participant at the Banff conference.

She talked of the high cost of power as “hollowing out” our economy.

A slight overstatement. What rising power rates and food costs will do is widen that group of people whose entire incomes provide only the basics, and for whom no mistakes are allowed in purchasing decisions.

We may have low inflation now, but the middle class and new retirees are going to have to make adjustments.

For the poor, what’s to adjust?

Greg Neiman is an Advocate editor.

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