Soaring prices for consumer goods is a complicated issue for Alberta. The province benefits wildly from high commodity prices, but just like everyone else in the world, people here are being hit by increasing costs in a still-shaky economy.
The country’s inflation rate is speeding upward alongside those of other countries, including the United States, that are struggling with supply-chain issues as consumer spending rebounds. Households are paying more for groceries, new vehicles and fuels such as natural gas and gasoline.
The good news for oil-rich Alberta is that higher prices for the crude refined into gasoline here and in the United States help the province’s finances in a major way. A fiscal update this week showed this year’s deficit is likely to be less than one-third of the size predicted in the February budget.
Every US$1 increase in the average price for the benchmark West Texas Intermediate over a full fiscal year produces an extra $230-million in revenue for the Alberta government. And even as the cost of crude drops in conjunction with rising fears about the Omicron variant of the coronavirus, per barrel prices are still $25 higher than the Alberta government predicted nine months ago. Higher prices for natural gas help, too.
RBC Economics said in a report this week that Saskatchewan, Alberta and Ontario will lead the way in Canadian economic growth in 2022. Alberta’s seasonally adjusted unemployment rate dropped to 7.8 per cent in November, far from the eye-popping 15 per cent in June, 2020. Jason Kenney said a rebounding economy will have a positive effect on wages. “As the economy picks up momentum, I expect to see wage inflation to help at least some families cope with the higher cost of living,” the Premier told reporters this week.
Although the signs point to recovery, it’s still an economy getting out of a trough. The province has a higher unemployment rate than others do. And Albertans’ famously high incomes have been decreasing in recent years, while other provincial median incomes have grown.
“The pandemic drilled a deep hole—the deepest among the provinces,” with GDP falling nearly 8 per cent last year, RBC Economics said this week. And Alberta had not fully recovered from its 2015-2016 recession when the pandemic hit.
It appears people aren’t actually feeling the relative good news, yet. According to an Angus Reid Institute survey from the end of November, 52 per cent of people in Alberta -- a higher percentage than in any other province -- say this year feels more stressful than most when it comes to their budget. The same survey found that Albertans are more likely than residents of any other province to say this year feels more emotionally stressful than a typical year. (Not surprisingly for the province to the west that has been devastated by heat, fires, flooding and landslides, British Columbia is a close second).
And among the provinces, Alberta has the highest proportion of people, two-in-five, who report being both financially and emotionally stressed. (Across the country, women age 18-34 are also likely to be in this group, or all people age 35-54).
The province’s NDP says Albertans have been saddled with even more costs and stressors because of the United Conservative Party’s handling of issues that include forcing the country’s highest increases in postsecondary tuition fees for the past two years, and deindexing personal income taxes to allow bracket creep.
“It’s not Jason Kenney’s fault the price of tomatoes or bacon is up around 12 per cent, but it is his fault the tuition is up 12 per cent,” Finance critic Shannon Phillips said.
(Mr. Kenney dismissed such criticisms this week by going back to the NDP’s embrace of a carbon price, “the biggest tax increase in Alberta history,” when the party was in government.)
But there’s also the persistent, pesky questions about the economic (and reputational) hit of the province’s Open for Summer removal of COVID-19 health restrictions, and the correlated belated response to the fourth wave of the pandemic. The NDP continues to hammer the government over who exactly was in charge of pandemic decision-making in August while the Premier and the health minister were on vacation and the province’s hospitals became overwhelmed with the ill and dying.
The Omicron variant and the questions about how bad this new mutation will be have created a whole host of new economic uncertainties. And inflation is likely to continue to be a global headache for months to come, and could even be worsened in some regards.
Mr. Kenney this week said sharply rising costs make life more difficult for everyone. In uncharacteristically restrained fashion, he didn’t wade too far into the House of Commons fracas over inflation, and the federal Conservatives’ argument that excessive spending by the Trudeau government and Bank of Canada quantitative-easing programs are to blame. The Alberta Premier said simply that he calls on Ottawa to adopt responsible monetary and fiscal policies “that do not add fuel to the fire.”
His government is still figuring out what it might do to help Albertans. “We are looking at what measures we might be able to take before or in the February budget,” the Premier said. As one sign of what might be considered, Finance Minister Travis Toews said in an interview in October he will watch during the winter to see if anyone needs help with their home heating bills.
“The good news is we have an abundance of natural gas here and there’s an ability of our industry to extract it, process it and distribute it very efficiently,” he said. “We’ll be paying attention.”
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