Why is inflation still steadier in Quebec?

While Canada’s inflation rate ended up being somewhat lower in June, that’s not the case for Quebec’s inflation rate, which remains above the national average. But what explains this difference?

One of the main reasons is the rate of inflation in services, which reached 5.4% in Quebec in July, compared to 4.3% in Canada for the same month.

Here are some of the elements that played on the increase:

• “strong increase” in wages

According to Desjardins chief economist Helen Begin, the “strong increase” in wages in Peel County would not be unrelated to this increase given that “a third of service prices depend on the labor force”.

Thus average weekly earnings rose 4.1% in Quebec, which, with the help of government fiscal support, would have allowed personal income after taxes and inflation to jump 1.6%.

Meanwhile, this income decreased by 0.4% in Canada.

• Service shut down during a pandemic

The COVID-19 pandemic has also played a role in business closings, which have been more frequent and longer in Quebec than in other provinces in the country and which have weakened them.

“The prices charged to customers had to be adjusted accordingly in order to maintain a certain profitability of the establishments, particularly in the restaurant sector,” El-Sayed explained.^I Begins.

• Lower prices for daycare services…but not in Quebec

The economist noted that prices for daycare services have fallen by about 20% over the past year with the establishment of a national program by Ottawa.

However, this decline has not been felt in Quebec, since the province has its own network of subsidized daycare centers.

Thus, the pressure on the cost of living has been reduced for Canadian families, though not necessarily for Quebec families.

• Larger unnecessary expenses

Some entertainment expenses were more common among Quebecers than among the rest of Canadians.

In particular, we find an increase in the purchase and use of recreational vehicles (+4.3%), home entertainment equipment and services (+6.1%) and cultural and leisure services (+4.8%).

“The financial maneuvering of Quebecers, which is less limited than in some provinces, could have further stimulated demand for discretionary goods and, in turn, prices,” the lady said.^I Begins.

Although the inflation rate is higher than it is in Canada, the economist assures us that “the factors that contributed to keeping the inflation rate high in Quebec for several months should gradually fade away.”

Quebec should therefore soon reach the national average.