Grocery barons milking inflation for all its worth

 

Inflation is quite something. Just the talk of it encourages its self-perpetuation. 

This year a fine red line has been erased, allowing almost everyone to adjust their prices to more “appropriate” levels. 

That streaming platform I use? Let’s tack on another $5 per month (25% increase). 

Mushrooms – the one grocery item I’m familiar with – add another dollar per package (33% increase). 

Even the cost of developing my daughter’s school pictures has increased – there’s now a labour and fuel fee of $2 per order! 

I’m not even mentioning the price of gas, cars or bikes... Bikes, of all things, have doubled in price over the last two years. Used cars, if you’ve been looking for one, are up by more than 20%. 

I’m in a position where I can afford the extra costs, but many are not so fortunate. It’s a fine line between working for a living wage and working in poverty. Utilities alone have increased 3-5% per year on average over the last five years where I live, even before the Great Inflation of 2022. Now groceries have increased 10% year over year. These are life essentials. 

People my age have been fortunate to have low inflationary pressures for most of our adult lives, which has allowed us to borrow money to buy homes and cars for very little. That’s all changing. For the savers out there, it might be welcome news – especially those who prefer the low-risk kind of investments. GICs are finally looking attractive again. Guaranteed five percent interest? I’ll take that, even though I’m still losing out to inflation! 

But most people don’t have money lying around to invest. We’ve been conditioned by low interest rates to borrow to the max. Only now, those rates aren’t so low.

It’s ironic that to battle inflation, central banks need things to cost even more. With central banks raising interest rates a whopping 4% in one year, homes, cars and other big-ticket items cost more to pay down. One man who bought a condo in Ontario this spring said he now spends $2100 on his mortgage instead of $1400. A friend of mine said his apartment rent went up $300 per month this summer. There were no other options but to pay the 25% increase. 

It’s a little too easy, if you ask me, for those making the most to squeeze any surplus out of those making less. Like I said, once the inflation narrative takes over, look out. Some people are using it to their advantage. 

Grocery chains in particular look like the robber barons of the 19th century, with little consideration for their low-wage workers. Loblaw’s CEO Galen Weston gained popularity during the pandemic by giving his workers a two-dollar per hour pay raise during the first year of covid, but then he revoked the pay bump just as inflation began to rise. But that’s not all that was increasing – his store profits are up 30% this year thanks to the inelastic demand for higher-priced food.

It’s a little discouraging for the person making $15 an hour working at a till all day. As one middle-aged worker who was bagging my groceries told me, it’s not enough to live on. 

With today’s prices, it certainly isn’t.