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Email this2:02 pm
September 11, 2013
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Vatox, I can't make the points you are making because I disagree. If I have $100 and a year later, after taxes, I have $102.50 but it now costs $102.80 to buy what I could have bought for my $100 last year, not only have I not made any money but I have lost money in the sense that I can't purchase as much as I could have a year ago. As money is ultimately of zero use unless it's traded for something useful (yes?), I'm in a worse position than I was a year ago. So, ok, I didn't "lose" money, but I'm poorer, if that resonates better. (That might not have been the case if I'd chosen other asset classes, such as a vacation or rental property.) And my perception in my experience is that happens to savers whether rates are high or low. Maybe savers of cash only truly get richer in periods of deflation, I don't know, I've never lived during such a time.
2:35 pm
October 21, 2013
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Hindsight about where you put your money, or should have, is a wonderful thing, and provides for much fascinating conversation, but is never available when making those decisions.
It's quite true that savers increase their wealth and succeed in dealing with inflation by saving money and being discerning about their expenditures. This is not ill-considered or sneaky; it's a very practical way, and one of the safest ways, to build wealth if you can't afford greater risk or don't need to take it in order to be secure. There is nothing wrong with the old adage, "pay yourself first". From what I have read in the past in various financial sources, it is the way most people actually do it. The only question is what you do with it once you've set it aside.
Like many people, for most of my life, I couldn't afford the risk. Now, having succeeded with a conservative strategy, I don't need to take it. So, I've never found a use for the stock market in my life. Sure, in hindsight, I'd be even better off in the market perhaps (depending). See first paragraph.
The only thing that really worries me is the stability (buying power) of the Canadian dollar. I have some in USD but that doesn't make me feel much better.
2:53 pm
October 21, 2013
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I wouldn't take Bill's example at face value. It may be true for some but it certainly isn't true for me. As he says, it begins with the word "if", so is hypothetical.
It looks like inflation for 2018 might come out at about 2.2%. although we don't know yet. I see no reason to assume 2.8%.
Considering my average tax rate, if my money were all invested at 3.5%, I would be ahead of taxes and inflation by 80 basis points over the year. It won't work out that well this year because my money is not all invested at 3.5%, but this is because we're in a rising rate environment and it averages out over time.
I do agree that money is only worth what it will get you. But, still, more is better than less, and sometimes people can never make up what they lose in bad investments. Ah, hindsight! As soon as I develop eyes in the back of my head, I'll be sure to change my investment strategy.
4:00 pm
April 6, 2013
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Norman1 said
In some months, there is deflation. Inflation does not occur evenly throughout the months of the year.For the 12 months ending in September, all-items CPI inflation was +2.2%. That doesn't mean that prices moved up evenly at (1 + 0.022)1/12 - 1 = +0.182% per month for 12 months.
For example, all-items inflation was actually negative in September: -0.4% for the month. That's not year-over-year. That -0.4% from end of August to end of September!
Vatox said
Technically it is called disinflation. Deflation only occurs when you have inflation below zero(negative). In this case it's only a drop in the inflation rate.
Prices actually did fall in September.
All-items Consumer Price Index (CPI) from Statistics Canada was 134.2 at the end of August. At the end of September, the all-items CPI was 133.7. Prices actually did drop:
133.7/134.2 - 1 = -0.4%
Deflation did occur during the month of September.
4:57 pm
April 6, 2013
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These are the inflation numbers using 2002-based all-items CPI:
| 2017 | 2018 | |||||||||||||
| Aug | Sep | Oct | Nov | Dec | Jan | Feb | Mar | Apr | May | Jun | Jul | Aug | Sep | |
| CPI | 130.5 | 130.8 | 130.9 | 131.3 | 130.8 | 131.7 | 132.5 | 132.9 | 133.3 | 133.4 | 133.6 | 134.3 | 134.2 | 133.7 |
|
Inflation (MoM) |
+0.2% | +0.1% | +0.3% | -0.4% | +0.7% | +0.6% | +0.3% | +0.3% | +0.1% | +0.1% | +0.5% | -0.1% | -0.4% | |
| Inflation |
+2.8% (YoY) |
|||||||||||||
|
+2.2% (YoY) |
||||||||||||||
|
+2.2% (YTD) |
||||||||||||||
8:11 pm
October 29, 2017
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Norman1 said
Prices actually did fall in September.
All-items Consumer Price Index (CPI) from Statistics Canada was 134.2 at the end of August. At the end of September, the all-items CPI was 133.7. Prices actually did drop:
133.7/134.2 - 1 = -0.4%
Deflation did occur during the month of September.
No my friend. That's a decrease in inflation. It is not deflation. Deflation is below zero and September had 2.2% inflation. The -0.4 is called disinflation.
Why do people keep doubting my posts. You really need to do some homework on terminology and research how it all works before you question something.
8:31 pm
April 6, 2013
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Vatox said
No my friend. That's a decrease in inflation. It is not deflation. Deflation is below zero and September had 2.2% inflation. The -0.4 is called disinflation.
Why do people keep doubting my posts. You really need to do some homework on terminology and research how it all works before you question something.
No, the month of September did not have 2.2% inflation. According to Statistics Canada, consumer prices fell 0.4% during September. The month before, prices fell by 0.1%. A fall in prices, is by definition, deflation.
Not sure where you got the idea that inflation was 2.2% in September. Annualized, that's over 24% per annum. This is Canada, not Argentina!
9:11 pm
October 29, 2017
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Norman1 said
Vatox said
No my friend. That's a decrease in inflation. It is not deflation. Deflation is below zero and September had 2.2% inflation. The -0.4 is called disinflation.
Why do people keep doubting my posts. You really need to do some homework on terminology and research how it all works before you question something.No, the month of September did not have 2.2% inflation. According to Statistics Canada, consumer prices fell 0.4% during September. The month before, prices fell by 0.1%. A fall in prices, is by definition, deflation.
Not sure where you got the idea that inflation was 2.2% in September. Annualized, that's over 24% per annum. This is Canada, not Argentina!
No, no, no! OMG! This is terrible.
Those drops you are quoting are decreases in inflation. Got it?
The MoM numbers show drops from July to August to September, that's not deflation. The inflation values per month(YoY) are in this chart. Every month shows inflation. Note the difference between each consecutive month and you get the MoM rate you are calling deflation from August to September, which it isn't, its disinflation and characterizes decreased inflation.
9:40 pm
October 29, 2017
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9:55 pm
October 29, 2017
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No deflation in 2018. You can clearly see the deflation portion of the chart.
10:03 pm
October 21, 2013
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Forum members may find this helpful.
https://www.investopedia.com/ask/answers/032415/what-difference-between-deflation-and-disinflation.asp
10:14 pm
October 29, 2017
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Loonie said
Forum members may find this helpful.
https://www.investopedia.com/ask/answers/032415/what-difference-between-deflation-and-disinflation.asp
Disinflation, on the other hand, shows the rate of change of inflation over time. The inflation rate is declining over time, but it remains positive. For example, if the inflation rate in the United States was 5% in January but decreases to 4% in March, it is said to be experiencing disinflation in the first quarter of the year.
Hmm.. exactly what I stated.
Thanks Loonie for doing some research instead of doubting my posts.
11:12 pm
October 29, 2017
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Norman1 you have also shown to have an incorrect knowledge of the actual monthly inflation numbers.
You said..
Not sure where you got the idea that inflation was 2.2% in September. Annualized, that's over 24% per annum. This is Canada, not Argentina!
You do not add the monthly inflation numbers to get a yearly rate, as you imply with the 12 *2.2 to get over 24% Argentina. You average the 12 months of YoY numbers. For Canada, you use October to September values.
7:54 am
April 6, 2013
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Vatox said
Norman1 you have also shown to have an incorrect knowledge of the actual monthly inflation numbers.You said..
Not sure where you got the idea that inflation was 2.2% in September. Annualized, that's over 24% per annum. This is Canada, not Argentina!You do not add the monthly inflation numbers to get a yearly rate, as you imply with the 12 *2.2 to get over 24% Argentina. You average the 12 months of YoY numbers. For Canada, you use October to September values.
Those are your words, Vatox, that inflation was 2.2% in September. It was not. Prices did not go up 2.2% in September.
During the month of September consumer prices dropped 0.4%. A basket of goods and services was $134.20 at the end of August. At the end of September, the same basket was $133.70. That clearly satisfies the definition of deflation, including the definition from Loonie's Investopedia link: Deflation is a decrease in general price levels of throughout an economy.
One does not average the year-over-year number to get the annual one. That 2.2% year-over-year is not a monthly number. That is the inflation for the 12 months ending in September. That is, the basket of good and services was 2.2% higher in price at the end of September 2018 than it was at the end of September 2017/start of October 2017. It does imply anything about the prices at the beginning of and the end of September 2018.
Those drops in August and September are not changes in the year-over-year inflation rate. All the year-over-year, year-to-date, and month-over-month numbers I presented are calculated the same way: % change of CPI over the period. Mathematically, one does not get "% change in inflation rate" when the the period is one month and "inflation rate" when the period is one year or year-to-date.
Furthermore, the drops don't even match the changes in the year-over-year number. The year-to-year went from 2.8% ending August to 2.2% ending September. That doesn't match the -0.4% month-over-month number for September.
That graph of annual inflation rates does not disprove deflation in 2017 and 2018. Prices did fall during the months of December 2017, August 2018, and September 2018. The reason the annual (year-over-year) numbers don't go negative is that the price increases in the other months in the 12 month periods were more than the price declines.
8:00 am
April 6, 2013
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Vatox said
What does that say? CPI/prices were up 2.2% year-to-year ending September. The same CPI/prices (not inflation rate) decreased 0.4% month over month September.
What is deflation? From Loonie's Investopedia link: Deflation is a decrease in general price levels of throughout an economy.
9:21 am
October 29, 2017
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I can't believe this. This is unreal!
It does not say the prices decreased. It does not say prices decreased, it does not say prices decreased.
It says CPI decreased. That's the index and that's the inflation numbers that dropped.
It's disinflation MoM and there was no deflation.
Please show me any official report that states PRICES decreased. CPI is an index, and is an inflationary value. It isn't prices themselves. Yes, prices of goods are used to dertermine the CPI but just because CPI falls, it does not necessarily mean prices are falling. The CPI inflation(YoY) must be below zero in order for prices to fall and that would be deflation. The drop in CPI simply means prices are increasing at a slower pace. But they are still increasing.
When it states CPI decreased, it means inflation decreased, not prices.
Why can't you understand this? You clearly do not have the means to comprehend this information. You read the numbers, like Bill does, but you don't understand their meanings.
Please stop.
9:29 am
October 29, 2017
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Peter, you really need to weigh in here. This is your site and Norman1 is adamant that deflation has occurred. Do you want this incorrect information on your site?
9:48 am
October 29, 2017
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Okay Norman1, what dropped exactly, prices or CPI? They are different things, so don't tell me they both fell.
11:08 am
September 11, 2013
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As Norman1 stated, prices AND CPI level at September-end were both lower than August-end level. Thus September was a month of deflation. (Vatox, I know I said I was done with you but geez Louise!)
11:35 am
October 29, 2017
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No it isn't. Inflation was 2.2% in September YoY. You people are hilarious. Positive inflation YoY is never deflation. The MoM value is negative, which indicates decreased inflation rate.
Positive inflation YoY can't be deflation. It's 2.2%YoY. I dare you to prove otherwise.
I will repeat, YoY inflation is positive and therefore can't be deflation.
It's that simple people.
Please write your comments in the forum.