A new report from Alberta Central says the prairie province is experiencing the most inflation out of anywhere in Canada.
Inflation across the country has reached levels not seen since the 1980’s.
But Alberta has been hit especially hard due to underperforming wages and income, the report argues.
“We find that Albertans have seen the most significant underperformance in their purchasing power since 2019 of all Canadian provinces,” Alberta Central chief economist Charles St-Arnaud said in the report.
The report notes that inflation skyrocketed following the close of the pandemic, as supply chain disruptions caused a shortage of goods. It was further exacerbated when energy prices skyrocketed last year amid the Russia-Ukraine conflict.
But the study also finds that Albertans’ purchasing power has declined an average 3.6% since 2019, while it has increased by 3.3% elsewhere in Canada. That marks an underperformance of over 6%.
“This divergence cannot be attributable to inflation, as inflation in Alberta has been mostly in line with the rest of the country,” St-Arnaud writes.
“Instead, significantly lower wages and income growth in Alberta are responsible for the lower purchasing-power.”
The report suggests the situation results from strong migration to Alberta keeping the supply of workers higher than in other parts of the country, as shown through the comparatively lower job vacancy rate in the province
It cites a second reason for the underperformance is the continued adjustment following the 2010s energy boom-bust cycle.
“After years of excess demand for labour in the 2000s and the first part of the 2010s, which drove wages well above the national average, we are seeing a return to normal with a convergence in wages toward the levels seen in the rest of the country.”
In 2019, hourly wages and weekly earnings in Alberta were 6-9% above the rest of the country, while compensation of employees and disposable income were, respectively, 23% and 20% higher than in the rest of the country. That advantage is melting away, the report says.
However, the report found that compensation of employees and disposable income are still about 14% above the rest of the country.
“This means that the typical Albertan still earns more, on average, than households in the rest of the country. However, what has been often referred to as ‘the Alberta Advantage’ is melting away and has almost disappeared, based on some metrics.”
