All summer long Canadians have been preparing for costs on most day to day expenses as well as on big ticket items to shoot up again, and with good reasoning. The very dry, very hot summer that spread across the country took away any quality farming opportunities as Canada fell into a bit of a drought; food is inevitably going to rise this fall. On top of that the price at the pumps just continues to go up, tuition for students is getting more unaffordable, and home prices while starting to stabilize are still at record heights.
So what’s the reasoning for it all? Stats Canada will be releasing numbers for the Consumer rice Index (CPI) this week which are reflective of the country’s rate of inflation; economists argue that a rise of inflation means costs must be adjusted to match that rise and keep a balance. Economically speaking that makes sense except for one little detail; the rate that inflation has been raising is much lower than the benchmark 2 percent. Yet prices stubbornly continue to rapidly rise.
Economists are expecting inflation to remain at 1.3 percent, well below the 2 percent mark which inflation has been running near or below since March. While the Bank of Canada expects inflation to return to 2 percent in the next year the fact that it has remained so low is making people wonder how accurate it is in projecting rising costs of everyday consumption. More important to ask is it all just a price grab motivated by greed?
One answer to these questions is in how data is presented. The most recent inflation numbers are only as far ahead as July which is when gas especially was at one of its lower price points this summer and just as the record breaking heat put Canada in a serious drought. Plus consumers see the rising costs in everyday expenses like milk, eggs, fruit, and cheese; but the bigger ticket items more or less stay stable with some less viewable price hikes happening here and there.
As for housing Stats Canada has come under fire for its method in obtaining rising home costs as a study by the C.D. Howe Institute said the CPI has failed to capture this year’s very high run up in house prices. The Institute recommends that Stats Can improve the CPI for tracking housing booms and busts so consumers are better prepared for what the market is really like; this could also be a reflection of the record household debt that has overburdened budgets across the country, mainly from extra home and mortgage costs.
In the end despite the disputes in inflation’s accuracy one thing is for certain; Canadians can expect to be paying more for less.