As Liberal PM Justin Trudeau sees his chances of winning another term during the upcoming snap election dwindle, his opponents, the Conservatives, have successfully used Canada's runaway inflation as a cudgel to slam Trudeau and his Liberals for mismanaging the economy. They're calling it "Liberal inflation", and it looks like the term is sticking.
According to Bloomberg, affordability has been one of the top issues ahead of the snap vote which is set for Sept. 20. Rising costs for housing, cars and gasoline have greatly benefited conservatives while accusing the incumbent Liberal government of stoking inflation with its debt-financed spending.
Trudeau's campaign won’t be helped by a 4.1% inflation reading for August, the highest since 2003. The Conservatives pounced on the number as soon as it hit Wednesday morning.
"The numbers released today make it clear that under Justin Trudeau, Canadians are experiencing an affordability crisis," Conservative Leader Erin O’Toole said in a statement.
While cost-of-living issues are a regular of feature of Conservative election campaigns, it’s become a central part of the narrative this year as the party seeks to take advantage of polls showing the issue is on voters’ minds. A recent survey by Abacus Data showed 38% of Canadians believe reducing their cost of living was a key factor impacting their vote, making it the top issue by far.
For many Canadians, inflation concerns are closely linked to housing affordability, which has worsened substantially over the last decade, but particularly since the start of the pandemic. Buying a home has gotten harder and more expensive almost everywhere in the country, not unlike the US.
To be sure, much of the criticism is hype - O’Toole’s party isn't offering up many concrete solutions to ease price pressures. An obvious way to curtail inflation, for example, would be to curb government spending but the Conservative platform’s fiscal projections don’t differ that much from those put forward by the Liberals.
Many aspects of the inflationary pressures facing Canadians are part of a global trend. Choked up supply chains have led to shortages, while a lack of new supply has led to an explosion in housing prices.
Like their counterparts in the US, Canada's Liberals continue to insist that the inflationary pressures are "transitory".
And while they have tried to avoid talking about the issue, Trudeau was finally forced to mention it during a speech earlier this week.
"We recognize that families are concerned about affordability," Trudeau said Wednesday when asked about the latest inflation reading at a campaign stop in Halifax, Nova Scotia. He added that his government would continue to support Canadians through the recovery from the COVID-19 crisis.
There's no question that this is making Trudeau politically vulnerable. The governing Liberals have been polling in low 30%-support levels for most of the campaign, well short of what would be required to gain majority control of the House of Commons, which was Trudeau's goal when he called the "snap" election.
Instead, not unlike David Cameron's Brexit gambit, we could see the decision backfire, restoring power to the Conservatives while shunting the Liberals back into the opposition.