StatsCan released the April inflation figures yesterday morning, and for the unprepared, they look bad – a 3.4 percent increase year-over-year, when the Bank of Canada’s inflation target is around two percent. This may look alarming, but there is a very simple explanation for why it looks high, and it’s something they call the base effect – meaning, when you compare it to last year’s figures, you need to put those figures in context. In this case, when you look at the April 2020 figures, we were actually suffering deflation in the early throes of the pandemic, when the first real lockdown started, and everyone was being sent home. We’ve had a fair degree of economic recovery since then, and inflation is really still running a little below target, but that gets obscured by the base effect, and that will likely carry on for another couple of months.

I don't recall seeing this posted before, but maybe it'll calm some people down. pic.twitter.com/NDA7lo8eMQ

— Stephen Gordon (@stephenfgordon) May 19, 2021

The problem, of course, is that you have media outlets that won’t properly contextualise this, looking at how much year-over-year prices like gasoline have spiked – which again, ignores that a year ago, gasoline prices dropped to an eleven-year low because demand cratered as a result of the pandemic. It’s a better headline to talk about “price surges” rather than explaining that base effect. And to be fair, some prices have gone up for a variety of factors, while others haven’t – it’s why the consumer price index looks at a basket of goods and provides an average, where some prices rise and some fall, and they provide additional measures that will strip out some of the volatile indicators to see how the more stable ones are faring. And more to the point, the Bank of Canada knows what they’re doing, and if they see runaway inflation starting, they will tamp it down with the tools available to them, such as interest rates.

But more than just media outlets, we have the Conservatives and Pierre Poilievre in particular who are determined to light their hair on fire and lie about the inflation figure in order to denounce the government (blaming it on deficit spending) or by saying that the Bank of Canada is in cahoots with them (when they are independent of government and kept at arm’s length). And lo, Poilievre even produced a video that railed about the price of lumber to make his point – err, except the price of lumber isn’t increasing because of the monetary supply or deficit spending. It’s rising because there is a housing boom, particularly south of the border, and lumber exports can’t keep up with demand, hence the price increases. That’s basic economics, which you think that the party that bills itself as “good economic managers” and the “party of the free market” would understand, but apparently not. And more to the point, we can be assured that Poilievre will neither a) read a gods damned report from Statistics Canada beyond the headline to understand what’s going on; or b) tell the truth when he can whip up hysteria for the sake of scoring points. And because they will quote statistics in a way that strips it of its context, they will lie to the public, and the media will do very little about it – at most, both-sidesing the comment rather than calling out the simple falsehoods.

Meanwhile, Poilievre’s antics were perfect to turn themselves into memes. It’s probably just as well.

https://twitter.com/maxfawcett/status/1395103214681300992

Good reads:

• More constitutional experts are weighing in on Quebec’s plans for a unilateral change to the constitution.
• The Canadian Forces is appointing more women to top positions, in the wake of investigations sidelining its top brass.
• The investigation into Major-General Dany Fortin has been referred to the Quebec prosecutor’s office – though this could just be related to legal advice.
• Federal and provincial privacy commissioners issued a joint statement urging caution on domestic use of “vaccine passports,” given their privacy implications.
• The BC Civil Liberties Association is suing the RCMP over the time it takes for them to respond to Civilian Review and Complaints Commission reports.
• Former justice John Gomery, who led the public inquiry into the Sponsorship Scandal, passed away at age 88.
• In case you were worried, talks between Michigan and Enbridge about the continued operation of Line 5 are carrying on.
• The Heritage committee is going back and forth on more proposed amendments to Bill C-10, with some predictable griping that they go too far or not far enough.
• While I don’t have a lot of time for Friends of Canadian Broadcasting, they do provide a reality check on Bill C-10, and make the case for its necessity.
• Paul Wells considers Avi Lewis’ decision to run for the NDP in the next election, considering the bomb he threw into their convention in 2016.

Odds and ends:

My latest for CBA’s National Magazine looks at the government’s promise to revive the Law Commission, for a third incarnation.

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