For yet another month the lowering price of gasoline and transport continues to dampen (and possibly hide) a CPI that has been around 2.0 % or higher for a long time (yet it continues to be called 1.0%, fun eh?). Stats Canada stated for July:
Lower energy prices continued to moderate the year-over-year rise in the CPI; however, the effect was less pronounced in July than in the previous month. In particular, the gasoline index was down 12.2% in the 12 months to July, compared with a 14.1% decrease in June.
I am sick of how these numbers are being used to hide the fact that inflation is high enough that interest rate controls on them should have been triggered months ago, but due to Canada’s population being Debt Junkies the government is too petrified of what this might entail. The other side of the coin is with oil revenues dropping, and gas prices dropping Canada is paying the price as well.
I am simply being paranoid? Maybe, but if you look at this graph, you will see my statement about 2.0% inflation (without gasoline) is maybe not as much me being paranoid, as being prudent:
I think the center of my vitriolic commentary centers around the numbers is the following statement:
Food prices advanced 3.2% in the 12 months to July, following a 3.4% increase the previous month. Prices for food purchased from stores were up 3.5% on a year-over-year basis in July. The increase in the food index was led by meat prices, which rose 6.1% year over year in July, following a 6.6% increase in June. Additionally, prices were up year over year in July for fresh vegetables and fresh fruit. Prices for food purchased from restaurants rose 2.7% in the 12 months to July.
Food has been over 3% growth for a good long time, and anybody who shops for food knows this, but nothing is being done about it, and the press dismisses it because gas is so darn cheap? You know what really galls me the most? None of the major party leaders have even batted an eye about this.
Bank of Canada’s core index
The nice thing about the Bank of Canada, is their index doesn’t include energy:
The Bank of Canada’s core index was up 2.4% in the 12 months to July, following a 2.3% rise in June.
The Big Graph
This graphic does an excellent job showing what is really up, and what is keeping the CPi down:
Where’s the Meat?
Maybe still on the grocer’s shelf as consumers will eventually go for lower cost product. Hamberger anyone? Nothing like ground up sirloin for a burger!
Or maybe, just maybe, people will learn the art of cooking. You know, making hanburger in to something like spaghetti sauce with all those fresh garden veggies coming in to season.
So I would expect a slight drop in inflation this quarter (concurrent with the stock market) as fresh produce and lower gas prices pad people’s spending power.
We are in a slight downturn right now. You read that right! RIGHT NOW!
So don’t panic and get all in a kertuffle over it. It is normal.
Prices go up, prices go down.
As long as you have a roof over your head, food on the table and something to do during the day (commonly referred to as employment) you are OK.
That vacation can be put off, tough out that two year old car another year, cut your subscription to Ashley Madison and get the kids off to school with a brown bag instaed of $10 a day. You will survive.