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Inflation at 7.7% May 2022 in Canada

Inflation is back for those who have been somehow living a quiet life entirely off the grid. Inflation is the rising of the: Cost of Living, Consumer Price Index or daily life essentials.

Inflation and a Flock of Seagulls
A Flock of Hairdressers

The last time it was this high I was in my 2nd year of University, and a Flock of Seagulls was a big thing. Those heady days of 1983. In those days you could buy a Canada Savings Bond with 19% yearly interest! Who would invest in the Stock Market, if you had less than a 4 year doubling period using CSBs?

No real sign of this rocket slowing down. I have been predicting this one, since 2009. At least we can hedge against it with #Bitcoin, no wait.

Lovely graphics from Stats Canada help us understand where the price explosions are coming from.

All the parts of the CPI graphically shown and how they have increased

When did this all start? Have a look at this graphic, which is very helpful.

12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline

We had a good run with low inflation, but looks like we are going to have to live with it now, but for how long?

Bank Rates for Past While… looks dramatic, but just wait!

What Shall We Do?

There are plenty of things that can be done if you have the financial ability to do so:

  • Lower your debt now, while interest rates are low. If you are unable to do that, maybe it is time to talk to a bankruptcy trustee or registered financial planner about what you can do about this. Things are not going to get better very soon.
  • Time to think about a budget again. Yes, budgets are very old-fashioned, but so was Inflation until a few months ago. If you have no budget, how do you know how Inflation is affecting you. If you have the ability to reign in your spending habits, now is the time.
Questrade

Previous Rants About Inflation

And that is just scratching the surface.

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Inflation at 6.7% March 2022 in Canada

Inflation is back for those who have been somehow living a quiet life entirely off the grid. Inflation is the rising of the: Cost of Living, Consumer Price Index or daily life essentials.

What caused this? It depends on who you ask, but we are in an interesting situation. We have inflation, near full employment, and now rising interest rates. The interest rates are a reaction to the rising prices. No matter what caused it, we are living in interesting times once again. Can the fragile economy that needed historically low-interest rates to withstand this onslaught survive? Will the Real Estate markets implode? I’ll tell you in 6 months.

Lovely graphics from Stats Canada help us understand where the price explosions are coming from.

All the parts of the CPI graphically shown and how they have increased

When did this all start? Have a look at this graphic, which is very helpful.

12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline

We had a good run with low inflation, but looks like we are going to have to live with it now, but for how long?

What Shall We Do?

There are plenty of things that can be done if you have the financial ability to do so:

  • Lower your debt now, while interest rates are low. If you are unable to do that, maybe it is time to talk to a bankruptcy trustee or registered financial planner about what you can do about this. Things are not going to get better very soon.
  • Time to think about a budget again. Yes, budgets are very old-fashioned, but so was Inflation until a few months ago. If you have no budget, how do you know how Inflation is affecting you. If you have the ability to reign in your spending habits, now is the time.
Questrade

Previous Rants About Inflation

And that is just scratching the surface.

{ 0 comments }

Inflation 4.4% September 2021

For those that have not followed me since 2005, allow me to say, I told them so. Back in 2009, I warned Inflation was coming with all this stimulation, and here it is (in 2021).

OK, so I am very much the Blogger who Cried Wolf on Inflation. This does seem to be the beginning of something, maybe even an Inflationary spiral.

Stats Canada thinks:

Prices rose year over year in every major component in September, with transportation prices (+9.1%) contributing the most to the all-items increase. Higher shelter (+4.8%) and food prices (+3.9%) also contributed to the growth in the all-items CPI for September.

From Consumer Price Index, September 2021

This is the highest rate since before I started commenting in 2005? Sounds like this is no longer a bump in the road, it might be a more elongated period of price increases. The Bank of Canada thinks this is going to last more than just a couple of months. Their statement about Interest rates is they may be going up sooner than expected. Interest rates are their only tool to slow inflation (aside from not printing too much money).

In reaction, the Bank of Canada announced the end of their Quantitative Easing program too.

… With the economy once again growing robustly, Governing Council judged that QE is no longer needed. This means we will stop growing our holdings of Government of Canada bonds….

Tiff Macklem – Governor Ottawa, Ontario October 27, 2021

Their commentary about inflation is more telling.

In Canada, inflation is currently running at about 4½ percent. We now expect it will rise to close to 5 percent by the end of this year, before coming back down to around the 2 percent target by the end of next year.

Tiff Macklem – Governor Ottawa, Ontario October 27, 2021
Microsoft Canada

Additional Reads From Stats Canada

Previous Rants About Inflation

And that is just scratching the surface.

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Inflation 4.1% August 2021 (Ouch)

For those that have not followed me since 2005, allow me to say, I told them so. Back in 2009, I warned Inflation was coming with all this stimulation, and here it comes (in 2021).

OK, so I am very much the Blogger who Cried Wolf on Inflation. I am not even sure this is going to be the beginning of an Inflationary spiral.

Stats Canada thinks:

The Consumer Price Index (CPI) rose 4.1% on a year-over-year basis in August, the fastest pace since March 2003, up from a 3.7% gain in July. The increase in prices mainly stems from an accumulation of recent price pressures and from lower price levels in 2020. Excluding gasoline, the CPI rose 3.2% year over year.

From Stats Canada Consumer Price Index, August 2021

This is the highest rate since before I started commenting in 2005? Something to note folks. Governments can’t keep printing money with impunity.

Gasoline is a major driver right now as can be seen when it is taken out of the calculations. Prices are rising, and you have Governments pumping money into the situation. What happens when that money stops? The other issue is you have a reticent workforce, who doesn’t really want to go back to their crappy jobs. Not a recipe for economic greatness.

What does the Bank of Canada think about this? Actually using their calculations we are only a little bit above their goals?

lternative measuresMay 2021June 2021July 2021August 2021
Percent
Measure of core inflation based on a factor model, CPI-common (year-over-year percent change)1.81.71.71.8
Measure of core inflation based on a weighted median approach, CPI-median (year-over-year percent change)2.32.32.52.6
Measure of core inflation based on a trimmed mean approach, CPI-trim (year-over-year percent change)2.72.73.13.3
Consumer Price Index statistics, preferred measures of core inflation – Bank of Canada definitions, year-over-year percent change, Canada

Source(s):Table 18-10-0256-01.

Additional Reads From Stats Canada

Previous Rants About Inflation

And that is just scratching the surface.

{ 0 comments }

Inflation 3.4% April 2021 (Told you so)

For those that have not followed me since 2005, allow me to say, I told them so. Back in 2009, I warned Inflation was coming with all this stimulation, and here it comes (in 2021). Mark my words this is only the beginning.

OK, so I am very much the Blogger who Cried Wolf on Inflation. I am not even sure this is going to be the beginning of an Inflationary spiral.

Stats Canada thinks:

Year-over-year consumer price growth (+3.4%) in April rose at its fastest pace since May 2011 amid the third wave of the COVID-19 pandemic, mostly because prices fell sharply during the early months of the pandemic. As some regions extended restrictions to limit the spread of COVID-19, causing employment losses for some Canadians, prices grew 0.5% month over month in April 2021, the same growth rate as in March 2021.

Prices rose in every major component on a year-over-year basis. Transportation prices (+9.4%) increased in April, mainly because of higher gasoline prices compared with April 2020.

From Stats Canada Consumer Price Index, April 2021

Funny no mention of the Trillions being poured into the Economy by every Government world-wide? Maybe they ran out of ink? The Moore’s Law like growth of Real Estate prices not too much of a factor?

Transportation went up a lot, but Food and Shelter are going up big time too.

The Food thing is going to get worse, with the inability to get the migrant workers that our farms rely on into the country. Is it a good thing we need migrants to do this job? That is for another days discussion. Oh and Electricity prices in Ontario went “back up” when they changed back to a “peak” and “off peak” billing again.

What does the Bank of Canada think about this? Actually using their calculations we are only a little bit above their goals?

 January
2021
February
2021
March
2021
April
2021
 % change% change% change% change
CPI-common3,51.31.31.51.7
CPI-median4,62.12.12.12.3
CPI-trim4,72.02.02.12.3
Consumer Price Index statistics, preferred measures of core inflation – Bank of Canada definitions, year-over-year percent change, Canada

Source(s):Table 18-10-0256-01.

Save up to 50% on life insurance.

Additional Reads From Stats Canada

Previous Rants About Inflation

And that is just scratching the surface.

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