The disparity between the rich and the poor in the face of inflation

Les disparités entre riches et pauvres devant l’inflation

Photo: Marie-France Coallier The Duty
A food bank in Montreal

Rich and poor are not equal before the inflation.

The price of the goods and services consumed by households has increased more quickly over the last 20 years in Quebec than those of the wealthiest households, reports a study unveiled Wednesday by the Institute for research and socio-economic information (IRIS).

The increase in the cost of living which have been faced by households of two or more persons from 1999 to 2019 has been 29.7% for the poorest fifth and 30.2 % for the quintile next, compared to only 24.8% for households belonging to the group of fifth of the richest and 23.6 % for the 10% most affluent.

This difference in inflation of 5 to 6 percentage points among the 40% of the poorest families and the richest is due to the fact that the two groups do not consume the same things and the prices were some more increased as the price of the other, ” says IRIS.

63%

It is the increase in food spending in 20 years, who consume on average 17 % of the overall expenditure of the poorest compared to only 12.5% for the richest.

This is notably the case of expenditure on foodstuffs whose prices were increased by 63 % in 20 years, and account for, on average, 17 % of the overall expenditure of the poorest compared to only 12.5% for the richest.

The same phenomenon occurred also, but in reverse, for the recreation for which prices have not increased, but decreased 3.4% in the past 20 years, the greatest happiness of the most wealthy, who spend 7.7 % to 8.2 % of their spending, compared to only 4.9 % for the poorest.

Imprecision serious consequences

These differences are completely elided in the usual statistics on the evolution of the index of consumer prices (CPI), observed in the telephone interview with the Duty Minh Nguyen, associate researcher at the IRIS and co-author of the study, with Pierre-Antoine Harvey.

This is a problem because it prevents to see a widening of the disparities between the rich and the poor, but not only, said the political scientist. The CPI is often used as a basis of calculation or justification in fixing all kinds of things which are directly dependent on households of modest incomes, such as minimum wage and the amount of some social transfers. “If we under-estimated the increase in the cost of the life to which they face, they are thus doubly penalised. “

3,4%

It is the decline in the price of leisure for the past 20 years, much to the delight of the richest who spend 7.7 % to 8.2 % of spending, compared to only 4.9 % for the poorest.

The differences in the composition of consumption baskets between the rich and the poor are not the only blind spot on the reality that is lived by the latter, reports the study of the IRIS. Seeking to reflect as faithfully as possible the evolution of the consumption habits of Canadians, Statistics Canada adjusts periodically what she puts in the basket of goods and services to which it relates the price each and every month, changing, for example, the relative weight given to the costs of a fixed telephone line and a mobile service, or, taking into account not only the prices posted on the main street, but also in e-commerce.

However, contrary to the richest, the poorest households appear to adjust their preferences in terms of goods and services, depending, in particular, of the evolution of their prices, substituting those for which the cost increases more quickly in other to more stable prices or declining.

“It may also be a form of impoverishment that is not detected, note by Minh Nguyen. It is unlikely, for example, that the decrease in the relative weight of food expenditure in the budget of these families is because they choose suddenly to eat less. One may believe, rather, that the increase in food prices will force, for example, people buy less meat and eat more pasta. “

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An effect COVID-19

The current context will do nothing to fix things, noted Tuesday in a press release the other co-author of the study of the IRIS, Pierre-Antoine Harvey. “The explosion in feed costs expected in the coming months because of the crisis linked to the COVID-19 risk greatly affect the poorest families. “

The two researchers did not conclude that the usual measures of inflation in Canada and in Quebec are incorrect, but rather incomplete. The governments should, according to them, to take account of the fact that the price increase is stronger for the households in the calculation of measures that are intended, as the Credit of solidarity. In contrast, they could also take into account the inflation, less high for the benefit of the richest in the setting of their last income tax bracket.

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