Original photo by Piggybank on Unsplash
Canadians are feeling sticker shock everywhere — at the grocery store, at the gas pumps, and on their utility bills. The rising costs of living is a major concern for most. For the millions who were already struggling to afford the food they needed, inflation will make their circumstances even more difficult.
According to Statistics Canada, the inflation rate in February 2022 reached the largest year-over-year increase since August 1991 at 5.7%. The surging price of groceries, most recently increasing 7.4% year-over-year in February, is certainly cause for concern, but so are the dramatic increases in the costs of shelter, energy, and other necessities. Food insecurity is not only about food, but rather the ability for households’ financial circumstances to afford food and other basic needs.
Food-insecure households spend substantially less on everything, including rent, mortgages, clothing, and other essentials like transportation. They are also more likely to make other financial compromises like delaying or foregoing prescription medications.
At the core of this problem is income inadequacy.
Based on the most recently available estimates from the 2019 Canadian Income Survey, 5.7 million Canadians lived in food-insecure households. Their incomes have been inadequate for basic needs and will become more so now.
What is the potential impact of inflation?
The unprecedented levels of inflation we are seeing will make household food insecurity worse, as food-insecure Canadians or those on the cusp find themselves without the financial means to absorb the extra costs and are forced to make compromises.
If nothing is done to increase the incomes of vulnerable households in line with the rising costs of living, we can expect to see both the prevalence and severity of food insecurity increase. That means more people will cut meal sizes, skip meals, or go whole days without eating because there isn’t enough money for food.
Given the strong link between household food insecurity and mental and physical health problems, worsening food insecurity could have major consequences for people’s health and wellbeing and for the health care system. Food-insecure adults are more likely to need health care services and incur more health care costs.
Who are most vulnerable?
Food insecurity is a serious problem for working Canadians with wages not being enough for many Canadians to make ends meet. In fact, the majority of food-insecure household in Canada rely on employment incomes. The most vulnerable in the workforce are low-wage earners, workers in part-time, short term, or precarious jobs, racialized workers, and those providing for multiple people with a single income.14
For as long as we’ve had data on household food insecurity, we’ve seen that households relying on social assistance, our income support program of last resort, are very high risk of food insecurity. Social assistance benefit levels have too low for most recipients to meet their basic needs.
What needs to be done to address food insecurity in light of this inflation?
Reducing food insecurity requires improving the incomes for low-income households. The increasing pace of inflation turns up the alarms on the need to reconcile wages, social assistance, and other income supports, and the actual costs of living. Critical policy levers like minimum wage and social assistance lie at the provincial and territorial level.
It also highlights the importance of incorporating indexation into the design of social policies to ensure that welfare incomes, minimum wages, and benefits at least keep up with inflation. (See David Macdonald’s article “Not all provinces protect their poorest from inflation” in The Monitor for an overview of indexation of federal and provincial/territorial policies)
Setting higher minimum wages that align with the costs of living is one thing governments can do to support low-income workers and reduce food insecurity, especially at a time of surging prices.
While indexation currently safeguards minimum wages from falling behind inflation in most provinces and territories, wages need to be brought up to a more adequate baseline level. Efforts to address job precarity, racism in the labour market, and improve income supports for low-income working households are also needed.
Adequate social assistance
Given the high risk of food insecurity — and more severe food insecurity — associated with being on social assistance, lifting supports to an adequate level must be a priority.
Only 3 provinces and territories that currently index their support rates (New Brunswick, Quebec, Yukon), but even in those jurisdictions, the rate of food insecurity among households relying on social assistance remains very high.
Policy action to help benefits keep up with inflation, like indexation or other increases to bridge the gap, can help mitigate inflation’s impact. However, benefit levels must be higher everywhere if they are to be adequate.
The way forward
How Canadians will manage through these times will depend on how provincial and territorial governments respond. With forecasts suggesting an extended period of high inflation and even steeper increases to the prices of necessities to come, they should act now to better support the incomes of the working poor and those in need of social assistance.
The consequences of inaction are worsening food insecurity, further deterioration of people’s health, and greater drain on our healthcare services and budgets.
Our public policies have left low-income Canadians, particularly working age adults and their families, behind for a long time. The mounting unaffordability of basic needs highlights what years of food insecurity monitoring has been telling us — we must examine the adequacy of wages and our social safety net, and institute policies to ensure everyone has enough money to meet their basic needs.
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