A grocery store owner tells me he usually sees food prices increase by 1 to 3%, and usually in January. Now it can happen at any time and the margin of increase is no longer what it use to be. Today, it is anywhere from 3 to 7% and sometimes, even reaches 10% overnight, for the same product. To avoid these higher costs, popular brands will often revert to ‘shrinkflation’, the process of reducing the size of the product for the same price, and sometimes keeping the same size but lowering the quality. Add to those cost increases, a strong inflation front, now at 4.1%. It’s a formula for financial pain, and a change in the choice of food for many of us.
This pandemic has led us to “weird economic outcomes” writes the Economist. You have heard of challenging supply chains by ships loaded with goods lined up for miles in harbours. That backlog at ports around the world is causing shipping delays and price hikes for consumer goods. The ships, fully loaded with containers, are waiting to drop anchor at their designated dock because longshoremen can not keep up with the sudden surge of post pandemic demand for an array of consumer products, from Chardonnay to a new Subaru.
In England, Boris Johnson told the British there will be empty shelves at Christmas.
Then there is this unbelievable labour shortage, despite a 7% unemployment rate. It has “exacerbated global supply chain strains”. One air conditioning company is so back logged because of a shortage of employees, it’s still installing AC units in October, and expects to be doing so until Christmas. And friends who lined up for their West Jet boarding pass, were told at the moment they reached the counter, that their flight had been cancelled because there was an insufficient number of on board staff as required by law. Delta recently said it had to cancel 100 flights. And a Florida café now uses a robot to greet customers and deliver to the tables.
We are facing an acute shortage of, well everybody, from truckers, butchers, warehouse workers, to hospitality, restaurant not to mention demoralized health care workers, and those quitting. A stop to federal government handouts, lower Covid hospital admissions, and more consistent government restrictions, will slowly resolve many of these issues. But industry leaders say it will take time, certainly well into 2022, perhaps even 2023.
There is an ongoing debate over whether countries have moved towards renewable energy too quickly. If you were around in the mid-seventies, you were part of our first energy crisis. Suddenly everything, not only electricity, gas, oil, and coal, but everything, led to a spectacular rise in inflation reaching 10%, and mortgage rates at 14%. No one is suggesting history will repeat itself, hopefully not with those numbers. But there are changing patterns in our use of energy, and we should be careful if we think we can suddenly abandon oil and gas. China is burning more coal than ever, and buying from anyone, including Canada (the port of Vancouver is the largest exporter of coal in North America) Don’t ever let a BC resident tell you they are the most disciplined environmentalists. They are not. Thanks to Norway, Europe’s second biggest gas supplier, smartly extracting as much natural resources as possible, (unlike Canada) is registering a constant trade surplus by supplying natural gas to Europeans, who would otherwise be at the whim of Russia for its winter heating. And who is selling more LNG (liquified natural gas) to the world? It could have been Canada exporting $billions yearly, but it’s the United States, whose so called environmental groups have forced Canada to keep its resources in the ground. Meanwhile the price of coal, gas and oil have increased almost 100%, since the month of May. Who says oil and gas are dead? Not for decades. Oil analysts say the world will continue to consume nonrenewable energy past 2050, when world leaders (including our Prime Minister) optimistically, and frankly unrealistically, predict totally green energy use. It’s our “first green energy shock of the green era”.
Quick note. Justin Trudeau promised “all civil servants will have to be vaccinated by October 31st, or else” during the recent campaign. The reality is there is no longer a deadline, and those who don’t wish to be vaccinated will not be fired but subjected to frequent tests. Hmm, sounds a lot like the same policy issued by Conservative Erin O’Toole during the campaign. Surprised? I am not, and neither are the 67.4% of Canadians who did not vote for him.
Final note. Well wishes to one of my very favourites, Ginette Reno. Get well soon Madame. We need you back at the Bell Center.
That’s what I’m Thinking.
Robert Vairo
robert@newsfirst.ca
