Adam Lachacz
CTVNewsEdmonton.ca
Digital Producer
Published March 18, 2022
As the price of transportation, groceries, and housing continues to pressure Albertans' budgets, one economist says our cost of living for some expenses is actually less than it was back during the last oil boom in 2007.
Alexander Gainer, an associate lecturer with the University of Alberta economics department, says most prices now are cheaper than 15 years ago once you adjust for inflation.
"When we calculate real price, it's just a way to adjust for inflation so that we can compare prices between different years to make it more of an apples-to-apples comparison," Gainer told CTV News Edmonton.
When it comes to housing, the average price in Edmonton 15 years ago was $382,000. When adjusted to the real cost, that figure is just below $516,000. In 2022, the average single-family home in Edmonton is approximately $494,000.
"On top of this, interest rates are really low now, so people's monthly mortgage rate would be much lower than it was in 2007," Gainer said.
While the cost of living in Alberta still remains one of the lowest in Canada, inflation is really affecting the price of groceries.
The cost of one kilogram of prime rib was around $19 in 2007. Adjusted for inflation would be closer to $26 today, but we pay $43.
"Meat prices are one of the biggest drivers of inflation and cost of living right now," Gainer added.
Gainer says that gas prices are also higher now than they were in 2007. Today, the cost of regular in Alberta hovered around $1.66. Fifteen years ago, the price of gas was 97 cents a litre, with an adjusted price of $1.33.
The average hourly wage in 2007 was around $21. Adjusted for inflation, that would be $29. In Alberta today, that would be slightly less than $33 per hour.
Published March 18, 2022
As the price of transportation, groceries, and housing continues to pressure Albertans' budgets, one economist says our cost of living for some expenses is actually less than it was back during the last oil boom in 2007.
Alexander Gainer, an associate lecturer with the University of Alberta economics department, says most prices now are cheaper than 15 years ago once you adjust for inflation.
"When we calculate real price, it's just a way to adjust for inflation so that we can compare prices between different years to make it more of an apples-to-apples comparison," Gainer told CTV News Edmonton.
When it comes to housing, the average price in Edmonton 15 years ago was $382,000. When adjusted to the real cost, that figure is just below $516,000. In 2022, the average single-family home in Edmonton is approximately $494,000.
"On top of this, interest rates are really low now, so people's monthly mortgage rate would be much lower than it was in 2007," Gainer said.
While the cost of living in Alberta still remains one of the lowest in Canada, inflation is really affecting the price of groceries.
The cost of one kilogram of prime rib was around $19 in 2007. Adjusted for inflation would be closer to $26 today, but we pay $43.
"Meat prices are one of the biggest drivers of inflation and cost of living right now," Gainer added.
Gainer says that gas prices are also higher now than they were in 2007. Today, the cost of regular in Alberta hovered around $1.66. Fifteen years ago, the price of gas was 97 cents a litre, with an adjusted price of $1.33.
The average hourly wage in 2007 was around $21. Adjusted for inflation, that would be $29. In Alberta today, that would be slightly less than $33 per hour.
USED TO STABLE INFLATION
According to a Leger poll released this week, 82 per cent of respondents in Alberta indicated that inflation represents either a "very serious" or "somewhat serious" problem. Only one per cent said inflation was not a serious problem to them at all.
"Inflation in Alberta and Canada has been between one and three per cent for most months for the last few decades," Gainer told CTV News. "But, starting around last summer it really started accelerating. It's a lot higher. We are around five per cent by the latest data."
Sixty-two per cent of Albertans that took part in the national poll rated the state of their household finances as "very good," while 35 and 25 per cent said it was "poor" or "very poor," respectively.
Of those that responded to the poll, Leger says more than 90 per cent of respondents indicated the worst impacts of inflation were felt by Albertans when paying for groceries, gas, and household utilities.
As inflation rises, the poll asked what steps Albertans were already or planning to take. According to the survey, 85 per cent of respondents said they were reducing food waste to make their money spent on groceries go further and that 81 per cent were buying less expensive food items.
Latest figures peg inflation at more than 5.5 per cent in Alberta, Gainer said. That is not expected to slow down until this summer, when most economists predict it will gradually decrease to around 3 per cent, which is considered within the normal range.
RELIEF LIKELY TO COME LATER THIS YEAR
Gainer says the major drivers of inflation are supply chain lingering supply chain challenges, labour shortages, and the Russian invasion of Ukraine.
"We've seen it drive up oil prices and therefore gas prices right away, that's visible. In a few months, pretty soon, we are going to see that drive up the cost of food as well," Gainer said.
While many people point to government aid provided during the pandemic as another driver of inflation, Gainer says those factors aren't the largest culprit.
"The stimulus that the different levels of government have undertaken and the low-interest rate the Bank of Canada has likely caused a bit of this inflation, but they are not the main culprit here," Gainer said.
"It's really tough to make predictions right now," Gainer said.
"The Bank of Canada and most economists, this was before Russia invaded Ukraine, expect prices to be high through the first half of 2022, and then they expect prices to ease later this year," he added.
The Leger poll, conducted by web survey, had a sample of 1,515 people in Canada, including 195 respondents in Alberta. Data was collected from March 11 and 13.
According to Leger, a margin of error cannot be associated with a non-probability sample. For comparison services, Leger says a sample of similar size would have a plus-minus 2.5 per cent margin of error, 19 times out of 20.
With files from CTV News Edmonton's Jessica Robb
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