Yukonomist: The ghost of inflation past

In the new year, it’s good to think about how prepared you are for a run up in prices

When the Yukon News reported that the City of Whitehorse was raising our property taxes by 2.3 per cent, I sighed and exclaimed that—once again—the city was raising taxes faster than inflation.

It turns out I was wrong. In an even more annoying turn of events, the city is actually raising property taxes by less than the rate of inflation. That’s because inflation has gone up.

The latest data from the Yukon Statistics Bureau shows inflation in Whitehorse was 2.5 per cent for the year ending September 2018 (comparable figures for the Yukon are unavailable). It had been comfortably under two per cent in each of the years from 2013 to 2017.

Goldbugs and monetarists have been warning about imminent inflation for years. They worry that the many years of low inflation we have enjoyed would be upended by the flood of money central banks unleashed as they used “quantitative easing” to revive the economy after the financial crisis.

Inflation can do a lot of economic damage. Those that remember the 1970s and 1980s will recall annual inflation rates of more than 10 per cent. It was a scary time to borrow money for a mortgage or to start a business.

When central banks finally moved decisively to bring inflation back down to earth, interest rates spiked to more than 20 per cent in Canada. Yukon old-timers will tell you about businesses in Whitehorse shutting down, people walking away from their houses, and classmates suddenly moving away.

So are we headed for a repeat of the devastating 1981-82 recession?

It’s far too early to say. The chart makes it look like inflation has been trending higher in late 2018. However, this could be a blip. Inflation in the year to August 2018 was even higher, at 3.9 per cent, before dipping to 2.5 per cent in September.

Nonetheless, as you make your budgetary resolutions for New Year’s, it’s good to think about how prepared you are for a run up in prices. Even if that run up is relatively minor in the annals of economic history, it can still hurt if you’re not ready.

One thing to know is that inflation hits different products in different ways. Food prices actually went down 1.7 per cent in the year to September. The categories “Health & Personal Care” and “Recreation, Education & Reading” both went up only slightly, less than one per cent.

On the other hand, shelter costs went up 3.8 per cent. This isn’t a surprise given our housing shortage, although you would be sheltered from this if you have paid off your house or have a long-term lease.

Transportation went up 6.7 per cent while booze and tobacco surged 5.9 per cent. Looking just at energy, it went up a stonking 15.3 per cent.

So your wallet will be feeling the pain if you just bought a poorly insulated house with a new mortgage, drive to work, smoke and drink.

On the other hand, you can laugh in the face of the Yukon Statistics Bureau if you don’t smoke or drink, like to read, and ride your snowbike to work from your fully paid-off and super-insulated tiny house.

Of course, just because prices went up last year doesn’t mean they’ll go up the same next year.

Energy in particular is volatile. You’ve got the carbon tax coming, but on the other hand that glut of Canadian oil and gas could lead to cheaper prices filling your truck or home oil tank.

You probably shouldn’t count on lower housing costs next year, unless you believe our various levels of government will come together to rapidly execute a high-impact action plan to make more land available and enable cheaper construction.

The uncertainty underlines how important it is to make a personal budget, and to have some cash in a rainy day fund just in case. A survey last year by the Canadian Payroll Association found that 47 per cent of respondents said “it would be difficult to meet their financial obligations if their paycheque was delayed by even a single week.”

This is not a phenomenon limited to low-income Canadians. You would probably be surprised at how many families of all income brackets have monthly expenses and debt payments that eat up all or more of that income. This can make dealing with an unexpected illness or transmission failure in the family minivan all the more difficult.

Despite how difficult it is with rising housing and energy costs, it is a hard fact of life that budgeting is an effective way to help you keep expenses under your income. That way you can put some money aside, or chip away at your debt.

The Financial Consumer Agency of Canada has a handy online budget tool if you want to get started.

In the meantime, there are some rising costs you know for sure. While property taxes aren’t going up faster than inflation, City of Whitehorse sewer and water rates will go up 2.76 per cent in 2019 and garbage fees 12.8 per cent.

Keith Halliday is a Yukon economist and author of the MacBride Museum’s Aurore of the Yukon series of historical children’s adventure novels. He is a Ma Murray award-winner for best columnist.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Kwanlin Dün First Nation chief Doris Bill holds up a signed copy of the KDFN <em>Lands Act</em> agreement during an announcement at the Kwanlin Dün Cultural Centre in Whitehorse on Oct. 20. Under the new act, called Nan kay sháwthän Däk’anúta ch’e (We all look after our land) in Southern Tutchone, KDFN will be able to allot citizens land to build their own houses on, for example, or to use for traditional activities. The First Nation will also be able to enforce laws around things like land access and littering. (Crystal Schick/Yukon News)
Kwanlin Dün First Nation’s Lands Act comes into force

The act gives the First Nation the authority to manage, protect and enforce laws on its settlement lands

Two doctors in Watson Lake say they are at risk of losing their housing due to a Yukon Housing Corporation policy that only allows one pet per family. (Wikimedia Commons)
Healthcare workers in Watson Lake say housing pet policy could force them to leave

The Yukon Housing Corporation has threatened evictions for having more than one pet

The Many Rivers Counselling and Support Services building in Whitehorse on March 28, 2019. Three people who sat on Many Rivers’ board immediately before it closed for good say they were relieved to hear that the Yukon RCMP has undertaken a forensic audit into the now-defunct NGO’s financial affairs. (Crystal Schick/Yukon News file)
Former Many Rivers board members relieved to hear about forensic audit, wonder what took so long

Three people who sat on Many Rivers’ board immediately before it closed… Continue reading

Whitehorse General Hospital in Whitehorse on Feb. 14, 2019. The Yukon Employees’ Union and Yukon Hospital Corporation are at odds over whether there’s a critical staffing shortage at the territory’s hospitals. (Crystal Schick/Yukon News file)
YEU, Yukon Hospital Corp. at odds over whether hospitals are understaffed

YEU says four nurses quit within 12 hours last week, a claim the YHC says is “inaccurate”

Two former Whitehorse Correctional Centre inmates, Ray Hartling and Mark Lange, have filed a class action against the jail, corrections officials and Yukon government on behalf of everyone who’s been placed in two restrictive units over the past six years. (Joel Krahn/Yukon News file)
Class action filed against Whitehorse Correctional Centre over use of segregation

Two former Whitehorse Correctional Centre inmates have filed a class action against… Continue reading

Education Minister Tracy-Anne McPhee, right, before question period at the Yukon legislative assembly in Whitehorse on March 7, 2019. The Yukon government announced Oct. 19 it has increased the honoraria rates for school council members. (Crystal Schick/Yukon News file)
Honoraria increased for school council members

Members of school councils throughout the territory could soon receive an increased… Continue reading

Triple J’s Canna Space in Whitehorse on April 17, 2019, opens their first container of product. Two years after Canada legalized the sale of cannabis, Yukon leads the country in per capita legal sales. (Crystal Schick/Yukon News file)
Yukon leads Canadian cannabis sales two years after legalization

Private retailers still asking for changes that would allow online sales

A sign greets guests near the entrance of the Canada Games Centre in Whitehorse on June 11. The city announced Oct. 16 it was moving into the next part of its phased reopening plan with spectator seating areas open at a reduced capacity to allow for physical distancing. (Crystal Schick/Yukon News file)
CGC reopening continues

Limited spectator seating now available

During Whitehorse city council’s Oct. 19 meeting, planning manager Mélodie Simard brought forward a recommendation that a proposed Official Community Plan amendment move forward that would designate a 56.3 hectare piece of land in Whistle Bend, currently designated as green space, as urban residential use. (Courtesy City of Whitehorse)
More development in Whistle Bend contemplated

OCP change would be the first of several steps to develop future area

EDITORIAL: Don’t let the City of Whitehorse distract you

A little over two weeks after Whitehorse city council voted to give… Continue reading

Whitehorse City Hall. (Joel Krahn/Yukon News file)
City hall, briefly

A look at decisions made by Whitehorse city council this week

Northwestel has released the proposed prices for its unlimited plans. Unlimited internet in Whitehorse and Carcross could cost users between $160.95 and $249.95 per month depending on their choice of package. (Yukon News file)
Unlimited internet options outlined

Will require CRTC approval before Northwestel makes them available

Legislative assembly on the last day of the fall sitting in Whitehorse. Yukon’s territorial government will sit for 45 days this sitting instead of 30 days to make up for lost time caused by COVID-19 in the spring. (Crystal Schick/Yukon News file)
Legislative assembly sitting extended

Yukon’s territorial government will sit for 45 days this sitting. The extension… Continue reading

Most Read