2:10 pm
October 21, 2013
Yearly Inflation Rate: 7.0%
Monthly Inflation Rate: -0.3%
Consumer Price Index (CPI): 152.6
2:21 pm
August 10, 2018
7:13 am
April 27, 2017
I find that monthly data tell us little to nothing. Sure, gas prices dropped a lot and it impacted the overall number. In practice inflation has been very persistent over a long period of time. The question is last couple of months are just a blip and fuel price artifact or if the upward trend is changing.
Three parameters out there which tell a better story:
1. Salary survey. Employers plan to give average raises of 3.8%. That’s a lot more than in the past but not pointing to “hyperinflation” either.
2. Canada’s money supply (M1) is dropping and has been since March. Still much higher than in August 2021 but the trend is good.
3. Benefits. Federal “inflation offsetting” measures will work to increase inflation.
Overall, looks like we broke the upward trend but its going to be a very long time before we get anywhere near 2%.
8:04 am
September 11, 2013
Makes sense, but on salaries that may be what employers plan to give but the power is in the workers' hands right now so I expect the actual to be significantly higher than 3.8%. To me the real inflation starts when the public sector unions at some point start getting what they're demanding (much higher wages, more staff) and then it's off to the races for everybody following. Until then it'll not change much up or down barring a major global event, imo.
9:24 am
October 27, 2013
10:22 am
January 11, 2020
At my workplace if 1200 they are raising the starting rates to attract new labour. The rest of us I believe won’t see anything close to the 3.8%. As we are locked into pricing for our contracts and can’t pass through increased costs to customers. I bet we aren’t the only employer with. This type of arrangement
3:35 pm
September 11, 2013
2:04 am
November 18, 2017
Bruford: You want to take a poll of people who have no way of measuring inflation to measure inflation?
mordko: According to the government, the current inflation-support measures affect very few Canadians, so the inflationary impact should be minimal. One must hope that recipients will pay down debt instead of going on buying sprees, but...
Bill: I agree. Most of the unmet demand for workers is at the bottom of the pay scale, and those will soon be swept up by the minimum wage floor anyway. Most Canadian employers have historically been more willing to pay overtime and dump more work on their staff than to raise wages to recruit more.
Now, inflation in tipping is getting nutso...
RetirEd
RetirEd
5:38 am
January 28, 2015
US raised rate to match Canada's yesterday ,and confirmed 2 more rate hikes by end of year @.5 with rate ending up @ 4.25 % .I suspect Canada will raise rate .75% and then.5% ending up @ 4.50% by end of year.Canada has traditionally had a .5% rate higher than the US to support the loonie .Will we see 2x.75 % and end up @ 4.75% ?
6:13 am
April 27, 2017
mechone said
US raised rate to match Canada's yesterday ,and confirmed 2 more rate hikes by end of year @.5 with rate ending up @ 4.25 % .I suspect Canada will raise rate .75% and then.5% ending up @ 4.50% by end of year.Canada has traditionally had a .5% rate higher than the US to support the loonie .Will we see 2x.75 % and end up @ 4.75% ?
I have no idea about future rates but seem to recall that the Canadian consensus is the raise of 0.75% by the end of 2022. Based on current guidance. That guidance is unlikely to change unless we see sudden, unexpected changes in CPI, wage expectations, etc. And the actual changes in the overnight rate can be either higher or lower than expected.
7:37 am
October 27, 2013
Per Mordko, it will highly depend on on real data as it comes in. However, I doubt we will see more than two 50bp hikes the remainder of this year in either country. These days, even one month is a long time in the future.
The US Fed commented yesterday that it sees a 'terminal rate' of 4.6% sometime in 2023 and doesn't see a return to 2% inflation until 2025. Those seem contradictory at first glance but it seems like an attempt for a soft landing with no formal recession. See https://www.federalreserve.gov/monetarypolicy/fomcprojtabl20220921.htm for the data points associated with these projections.
Then again, the views of the governors are only as good as their crystal ball which has been pretty cloudy.
11:03 am
March 30, 2017
As of now, a terminal rate of 4.5-5% is what central banks are "willing" to take it up to. That is the level deemed high enuf to suffocate inflation, and still give the economy a breathing space.
What the Fed confirmed with 100% certainty is that "dont expect rates to come down quickly" even if inflation looks under control, unless there is another covid like global shock that force their hands.
As to BoC being 50-100bps higher than Fed, it is just a historic rate plot. It does not have to be. Higher rates do NOT support FX in the long run. If it does, there would not be any country that needed to devalue their currency ever.
2:01 am
January 28, 2015
savemoresaveoften said
As of now, a terminal rate of 4.5-5% is what central banks are "willing" to take it up to. That is the level deemed high enuf to suffocate inflation, and still give the economy a breathing space.
What the Fed confirmed with 100% certainty is that "dont expect rates to come down quickly" even if inflation looks under control, unless there is another covid like global shock that force their hands.
As to BoC being 50-100bps higher than Fed, it is just a historic rate plot. It does not have to be. Higher rates do NOT support FX in the long run. If it does, there would not be any country that needed to devalue their currency ever.Really then please explain why the british pound is in free fall and that the Bank of England is expected to raise rate in an emergency 1% to support the pound .
No different then Canadian rate being higher than US to support the dollar . We were .5 % higher than the US all thru covid. Right now we are at the same rate and our dollar has fallen to 74 cents. Having a low dollar is good for exports , however it makes imports more exensive and adds to Inflation and we import most goods
3:47 am
February 7, 2019
5:30 am
March 30, 2017
Look at the energy situation and overall economy in Britain, and the expected ballooning of their deficit, one should not be surprised why its in free fall. Most if not all countries prefer their currencies to be "relatively weak" as it supports their export businesses, bring in tourists, among other things. They just dont want to see their currencies in free fall, as that fuels inflation in the short run.
Right now, its a global risk off situation, fear of global recession which is already happening, just not officially confirmed by stats and economics dept around the word. What do investors do ? They dump all other currencies and own US treasuries and US$. No other currency is spared in the selloff including CAD dollar.
7:13 am
December 12, 2021
savemoresaveoften said
"weak" Canadian dollar is in the best interest of the Canadian economy,
savemoresaveoften said
I suggest you read up on interest rate parity…..
savemoresaveoften said
They just dont want to see their currencies in free fall, as that fuels inflation in the short run.
nice improvement
8:03 am
April 27, 2017
“Canadian economy” isn’t a person, so has no interests. Some Canadians benefit from a weak CAD. Others benefit from a strong CAD.
New British PM did a dumb thing. The currency was already weak due to major economic challenges in the real economy. Inflation was already extremely high. As was the deficit. She responded by slashing taxes. This is only marginally better than Erdogan’s policy of slashing interest rates to subdue inflation.
10:01 am
January 13, 2022
mordko said
“Canadian economy” isn’t a person, so has no interests. Some Canadians benefit from a weak CAD. Others benefit from a strong CAD.New British PM did a dumb thing. The currency was already weak due to major economic challenges in the real economy. Inflation was already extremely high. As was the deficit. She responded by slashing taxes. This is only marginally better than Erdogan’s policy of slashing interest rates to subdue inflation.
Reaganomics at any time is quite questionable policy. Against the backdrop of high inflation, it could be a real disaster.
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