LOWER MAINLAND METRO MUNICIPAL CUPE BARGAINING BULLETIN #1

[Oct 27, 2011 12:41 PM]

The High Cost of Living

As we move into bargaining it's a good time to examine the real cost of living in the Lower Mainland. Employers love terms like 'zero mandate' but let's take a look at the costs with 'zero BS'. At first glance the Consumer Price Index (CPI) rates still appear relatively low:

Vancouver area CPI rose 1.8% in 2010 (Canada 1.8%; B.C. 1.3%)

Vancouver area CPI rose 2.58% in the first six months of 2011

Forecast: CPI growth in B.C. of 2.3% for 2011 and 1.7% for 2012 (source: Central 1)

All we have to do is look at a gas station or grocery bill to realize that overall CPI numbers don't tell the whole story. Let's look at some specific CPI component costs:

Gas:

Metro Vancouver consistently has the highest gas prices in Canada. At mid-October prices are hovering around $1.40 per litre - five cents more than the next highest city which is Halifax. For the first six months of 2011, B.C. gasoline prices rose an average of 16.65%.

Food:

Prices for food purchased from B.C. stores increased 4.9% in July. Food purchased from restaurants increased 2.3% after rising 8.8% in June. For the first six months of 2011, food purchased from stores rose an average of 4.58%.

House Prices:

Royal Bank (RBC) took a comprehensive look at housing affordability trends in August. About Metro Vancouver, it said: "...owning a home is a dream that only the area's highest-earning households can contemplate" and "among the markets, Vancouver really stands alone in its extreme unaffordability across all housing types."

RBC measures the proportion of median pre-tax household income required to service the cost of mortgage payments, property taxes and utilities. The higher the reading, the more costly it is to afford a home based on market values. For detached bungalows, Vancouver's average price was $822,000 (up 19.4% year over year), which requires a qualifying household income of $158,000 per year. The average price for a standard condominium was $410,000 (up 5.7% year over year) requiring a qualifying household income of $80,500 per year.

Royal Lepage reported that Metro Vancouver had the highest home price increases in Canada in the first quarter of 2011, rising an average of 9.7%.

Rent:

Metro Vancouver's average monthly rent for a two-bedroom apartment ($1,181) is the most expensive in Canada (CMHC). The Canadian average is $864. The Metro Vancouver Regional District defines affordable as housing "that does not cost more that 30% of a household's gross income..." Based on that, the median income of Metro Vancouver renters is $35,875 and an "affordable rent would be $897/month. From 201 to 2010, average apartment rents in Metro Vancouver jumped 30%.

SUMMARY

The overall consumer price index chugs along, but recent sharp increases in gasoline, food and housing costs are particularly noticeable. Metro Vancouver already has far and away the highest gasoline and housing costs in the country and as we know, gasoline, food and housing are the core monthly costs for working people.