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Loonie said
Would someone pleases explain to me why inflation is considered a "good thing", with a target of 2 to 3% which, if memory serves, is what the Bank of Canada prefers? In particular, why is it a good thing when said Bank also proclaims that interest rates will remain where they are for some time to come but continue to drop at the consumer level?

The CPI site says "The year-over-year increase in the CPI for June rose at the fastest pace since March 2011." Are we to understand that this is due to the recent high volatility in oil prices?

(These are not facetious questions.)

To the extent that 0.7% inflation is part of the "good thing" that is inflation, it seems reasonable to me under the circumstances.  

That’s correct Loonie, the target inflation rate is 2.5%.

Inflation is needed because of the world’s economic and societal design and because of human nature. Our system needs everything to grow in order to facilitate the growth of asset values and wealth. It’s human nature to try and get more and get better things. When Demand is higher than supply, it means everyone wants the product and so prices go up.

Essentially speaking, we need inflation because of competition for jobs, money, wealth and resources. Inflation keeps order and control of human societal growth. Too much or too little is bad because life becomes uncomfortable.

If the target inflation was zero, it would basically mean no completion or desire to acquire more or better things. When was the last time you saw the entire planet eating the same meals and having the same clothes etc. The powers that be, don’t like stagnation

Interest rates at different FIs don’t just follow the BoC rate changes, they have been holding back on dropping which is why they are dropping now. I’m surprised EQ has held 2.0% this long! FIs may also be fearing the future which is why long term GICs are low.

The fast CPI change is referring to the monthly change in year over year inflation. From May to June this year the inflation went from -0.4 to 0.7 which is a 1.1 acceleration. In February 2011 inflation was 2.2 and March was 3.3, so also a 1.1 acceleration. Nowhere between those dates, have we had such a big jump forwards.