August 2021 Inflation | Page 3 | General financial discussion | Discussion forum

Oh, yes. The cost of bureaucracy in Ottawa has to go up every election. 50% a year should cover it. Money well spent too. If Netflix jacks up the price, CPI will count it. When the Feds spend another billion on CBC its like it comes out of nowhere.

Yes, selected taxes are included.

Income taxes, GST refunds, and PST refunds are not consider to be part of the price of the basket of goods.

As Statistics Canada explains in the CPI FAQ, the CPI is not an index of the cost of living in Canada:

Is the CPI a cost of living index?

The Consumer Price Index (CPI) is not equivalent to a cost-of-living index (COLI). The CPI has often been used to approximate cost-of-living but it is important to note that the CPI and COLI are not directly comparable.

The CPI is based on a fixed basket of goods and services, which represents the average Canadian household's spending habits. The CPI measures the average change in retail prices encountered by all consumers in Canada.

By contrast, the objective of a COLI is to measure price changes experienced by consumers in maintaining a constant standard of living. A COLI can be linked to the notion of the minimum amount of money that would be necessary in different periods of time to ensure a given level of "well-being".

In short, the CPI measures the change in the cost of a fixed basket of goods and services, whereas a COLI measures the change in the cost of a fixed level of "well-being".

Canada and the U.S. politicians just keep on kicking the can down the road thinking that this could never happen here.

https://www.newsweek.com/venezuela-changes-currency-inflation-skyrockets-price-dollar-rises-black-market-1634860

They probably partied late the night before and fell asleep during those sessions!

US Federal Reserve pumped trillions into the US economy after the 2008 crises. Still no hyperinflation in the US over a decade later: Forbes (March 2021): Is Inflation Coming?

The Japanese central bank has tried for many years to inflate their economy with quantitative easing. Didn't work. Can't even get inflation on purpose!

That's why I think such sensational end-of-the-world hyperinflation stories are garbage.

Interest rates can rise without bring everything down if done gradually and when the economy has recovered.

Debt can be rolled over, partly or fully, when the government bonds issued now mature. No need to monetize.

Should the Bank of Canada be still the owner of the bonds, it won't even need to print any more cash then. It just needs to agree to roll them over like people do with a maturing GIC!

The price of the CPI basket has been rebouding at about 5½% per annum since January. The hope is that will moderate in the coming months.

Keep in mind the inflation target is 2% per annum and not zero. The goal next year (two years after the pandemic) is for consumer prices to be around 4% above the pre-pandemic prices, not back to pre-pandemic prices.

The mortgage stress test currently requires passing using a mortgage rate of the higher of (a) 5¼% or (b) 2% + actual rate.

So, mortgage borrowers should be good for at least eight hikes of ¼% each.