Trudeau to meet with cabinet as more Canadians blame government for inflation

financialpost.com:

Prime Minister Justin Trudeau is set to huddle with his new cabinet on how to address the soaring cost of living, a growing vulnerability for his government as more Canadians blame it for their rising bills.

Trudeau overhauled his front bench last month to focus on affordability, especially housing. A three-day retreat in the eastern province of Prince Edward Island will be the first opportunity for the new cast to hammer out potential solutions and messaging together.

Pressure is mounting. Three in 10 Canadians blame government spending over other factors for the rise in consumer prices, according to a Nanos Research poll for Bloomberg News. Another 22 per cent blame businesses for increasing their prices, while 10 per cent point the finger at the Bank of Canada.

“For the average person, it is like an inflationary spiral one cannot escape,” pollster Nik Nanos said by email. “Government spending increases inflation, the Bank of Canada increases rates and businesses then increase prices to cover rising inputs into goods and services.”

While headline inflation was 3.3 per cent in July, food prices were up 7.8 per cent and the central bank’s aggressive hikes mean mortgage interest costs have spiked 30.6 per cent. Record levels of immigration have exacerbated a housing supply shortage, helping boost the benchmark home price to $754,800.

Meanwhile, federal spending is still above pre-pandemic levels, with the government projecting a $40.1-billion deficit this year. Last week, Trudeau’s former finance minister, Bill Morneau, blamed the government’s extension of COVID-19 financial relief programs into late 2021 for helping juice inflation.

Trudeau has begun to send a message of belt-tightening. Treasury Board President Anita