Consumers rarely do anything unless they feel they get something out of it. I keep wondering what savings motivating system banks could put in place?
Canadians are notorious for loving rewards systems, where they can accumulate points for later purchases, maybe something like that? A points system that would pay more monthly, the more money you had in your savings account?
I think I am on to something here, if banks paid people these points that they could use to purchase things, that might motivate people to save more money.
A Savings Motivating Refinement
What if this point system allowed you to swap points for money? Better still what if you didn’t accumulate points for having more savings, you accumulated money? Money that would be added to your account balance, and then the next month you might accumulate more money because of this added money?
This is possibly the greatest idea ever to motivate consumers to save money, isn’t it?
We found out that Inflation is now at 2011 Levels, at 3.0% on a year-over-year basis. So what? Remember the Bank of Canada’s ideal rate is 2.0%, so this will most likely reinforce another Bank of Canada rate increase (in October). Now the B of C’s calculated Inflation is only 2.0% , but I don’t think they can ignore this kind of jump.
I haven’t commented on inflation for a while, but this report is important, for a lot of reasons. With the tariff wars that are going on, inflation is going to continue to rise (IMHO), and that will mean higher interest rates. Maybe someone will find sense and stop this Testosterone Laced bullsh*t trade war, but I doubt it.
Note also that Interest rates going up, contribute to Inflation (see the table below). Interesting spiralling effect. Stats Canada used to put out a more detailed report, but they have discontinued that report.
The Consumer Price Index for the period ending September 2017 is 1.6% (year over year). The Bank of Canada’s goal is to keep the inflation rate under 2.0%. The Bank’s own measurements have inflation running at either 1.5%, or 1.8% depending on which definition you choose. Both are below 2.0% as well.
Given Gasoline is fluctuating again, what does the CPI look like without it? Have a look:
Homeowners’ replacement cost is another add-on to home ownership to keep in mind as well. The drop in Electricity was expected with Ontario’s rebate program, but what will happen when the program ends? It is a rebate, not a price cut.
It would be imprudent to assume that low inflation, will mean no more interest hikes. The Bank of Canada has wanted to lower interest rate stimulation, and they will continue with this policy. They may slow down their rate plan but rates are going up.
Stats Canada on Friday published the monthly inflation report. The report overall shows that inflation is running at 1.0%, but as usual those numbers are deceiving. The detailed report shows a better view on things.
Main upward contributors:
Homeowners’ replacement cost (+4.1%)
Food purchased from restaurants (+2.5%)
Travel tours (+7.0%)
Traveller accommodation (+7.1%)
Natural gas (+10.0%)
Main downward contributors:
Women’s clothing (-2.5%)
Men’s clothing (-2.9%)
Household appliances (-3.3%)
I am glad to see groceries specific are not mentioned here, but food purchased from restaurants took a bump. The generic graphic gives you a better overall view though.
The January Consumer Price Index numbers came in from Stats Canada and it seems like gasoline pushed inflation to 2.1 % year over year in January. A rate of 2.1% enters the Bank of Canada worrisome zone. Using the Bank of Canada’s measures things are not as worrisome. If you check the Bank’s site, their numbers show below 2.0% which is in their “acceptable” zone.
Great news there in that fresh fruit and veggies are lower in price. We should all be eating a bit more healthy this month! The very bad news is Gas and Natural Gas prices sky-rocketing. Might want to turn the furnace down a little, and look at those hybrids again?
Historical Electricity Prices?
Stats Canada added a fun historical section, and this month, electricity prices.
Electricity has maintained approximately the same basket weight for the past 30 years. Since the basket update in 1986, the basket weight for electricity has ranged from 1.93% to 2.77% of the all-items CPI, and averaged 2.43%.
Given how much electricity prices have shot up in Ontario, wonder if this remains true?
Graph of the Month
CPI with and without gasoline prices is always an exciting graph to check out.
CPI or Inflation with and without gasoline included