Since July, 6 more businesses have closed than opened each month
Both Hands Wood-Fired Pizza and Bakery has been a mainstay in Thunder Bay, Ont., for over 20 years. Owners Derek Lucchese and Sue Holloway bake handmade pizza, bread, and granola in their large wood-oven stove for loyal customers.
But on July 1, Derek and Sue were going to give Paul Gibson and Michelle Murdoch-Gibson of Rowan Tree Collective the keys to the restaurant.
Even though Lucchese thought it was time to leave the restaurant, he said he’d be lying if he said inflation hadn’t hurt his business’s finances a lot.
“To be honest, we haven’t kept up with inflation and the prices of our ingredients as much as they’ve gone up,” said Lucchese, “partly because they change so much and so often.” It costs money to put up signs and keep everything up to date. So that has had a big effect on us.”
Lucchese said that inflation hasn’t made things easier over the past year, and he’s still feeling the effects of the COVID-19 pandemic.
“I’d say we’re still only about half or three-quarters of the way back to ‘normal’ before the pandemic, especially for the part of our restaurant where people eat in. People have either moved on and gone to other places, they still don’t feel comfortable, or they don’t want to go out to dinner like they used to.”
Business owners like Lucchese and Holloway aren’t the only ones who have been hurt by inflation.
Since July of last year, more businesses in Thunder Bay have closed than have opened. Karl Skogstad, an economist at Lakehead University, looked at Statistics Canada data and found that each month, on average, six more businesses closed than opened.
Overall, monthly data for the first half of 2022 shows that more businesses opened than closed.
Even though the data doesn’t say why the stores closed and doesn’t give a full picture, he said it could show how hard this year has been due to rising inflation.
“This net loss could be a normal thing that happens often in this area, or it could be the result of the economic pressures we are facing.”
Economists say that inflation is a national problem
Skogstad said that high inflation makes it hard for businesses to do well in the market.
“There is a lot of uncertainty in the economy when there is high inflation,” said Skogstad. “Costs are going up because inflation is high.”
Because of this, he said, inflation has made things difficult.
“Inflation hurts people, and since people own firms, it hurts the people who own them.”
Skogstad said that there isn’t much that can be done at home to ease the pressures of inflation. Since inflation is a national problem that doesn’t just affect Thunder Bay, he said, the problem needs to be solved on a national level.
“There is no easy way out, because if there were, we would have used it.”
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Find out more about how inflation affects your ability to buy things withWhat’s My Money Worth? is an interactive tool from the CBC.
Because rent and living costs keep going up, stores have closed all over Canada.
In Ontario, Businesses on Toronto’s Roncesvalles Avenue recently closed because they couldn’t afford a 30% rent increase.
Other small businesses in Windsor-Essex are having a hard time staying in business because rising grocery prices are making people change the way they shop.
Statistics Canada said last week that Canada’s inflation rate slowed to 3.4% in the year up to May. This is the lowest rate in almost two years and a big drop from April, when it was 4.4%.
The Bank of Canada has been Increasing interest rates quicklyOver the past few months to try to stop inflation from getting out of hand. The idea is that when rates go up, people’s budgets get tighter because they have to pay more on their debts.
When Canadians pay more money to pay off their debt, they have less money to spend on other things. That usually slows down the economy and makes prices go down.
Skogstad also said that it’s not clear to him how some struggling businesses could be helped without hurting others. He said that the government could pay each struggling business, but that the money would have to come from taxpayers in the end.
“You could do that, but you should know that it will help one group and hurt another. In economics, this is called a “transfer.” So if you’re okay with that, you can have that policy, but I bet there are some people who won’t be okay with it.”
The co-owner of a gift shop says that shipping costs are making prices go up
Since 2005, Danielle and Joey Roy have owned the Authentique gift shop together. Danielle said that they had to raise their prices because living costs have gone up.
“A lot of things have had to go, and the prices of a lot of our products have gone up. We’ve always been proud of our low prices. But we can’t do anything about it.”
Danielle said that many retail items are made in China, so the Roys have had to raise their prices to cover the rising costs of shipping and containers.
Joey said that he and Danielle are “some of the lucky ones” because they can run their business well even though prices are going up.
Joey said, “I think the people who are just on the edge of what they can afford would be hurt the most.” “We haven’t reached the point where we feel really pressed yet. So it’s a good thing that our business is flexible enough to still do well.”
Lucchese said he had to raise prices a few times, too, and he knows that rising costs affect his customers the same way they affect him and his family.
“That’s a real bummer, but the truth is that if we wanted to keep up, we would have had to raise our prices a lot more and a lot more often. So we’ve just been doing the best we can.”
As Lucchese was getting ready to leave Both Hands, he said that he and his family had been trying to hold on.
“We’ve been trying to take it easy as much as possible. It has hurt us on both ends, and if we really wanted to keep the business going, we probably would have just raised our prices more aggressively and made some other changes to keep up.
