Low Inflation Again | Page 2 | General financial discussion | Discussion forum

Loonie said
On behalf of those of us who DO care about certain gov't benefits, it sounds like we shouldn't expect a rise in OAS in October. Correct?  

Yes.

Kidd said
Have you ever seen... the gas pump price has dropped by 4 cents per litre overnight and there are lineups at the gas stations? The tv news crews interview those waiting in line, and the car owner tries to estimate how much they're saving. I've seen this play out more times than i can count.

By the math... what do you buy in gasoline, 50 litres? at a savings of 4 cents per litre THAT'S a savings of $2.00. Two dollars... the rocket scientists waiting in line estimate, 10 dollars or more.

Now, how many litres of gas do you use per week? OR how often do you fill your tank?

I eat food everyday. I eat more $$$ worth of food than $$$ worth of gas i burn.

Inflation has to be based on actual percentage of usage. There was a report a few weeks, maybe a month ago about the flawed calculation of inflation. If 30% of your net income goes toward food, then food can NOT have the same weight as your 5% of net income purchase of gasoline.  

Back in 2002 I worked in one city. Gas was about $1.00. In my own city gas was $1.05. I filled up 1/2 tank at home. In 18 years the price of gas has remained the same. Yes there are some things that we know have increased. I am sure there are plenty of items that are stable. CPI is up 1.7% yearly. Total 35% in 18 years.

Bill said
...My wife has apparently decided one of her retirement hobbies is to spend many of her days shopping for and making food for our adult children and their partners and families...

LOL. Glad to know it isn't just me in that situation. Just us two old farts here in the house, but any algorithm trying to analyze my credit card spending patterns must think I'm either running an underground restaurant or operating a food service delivery hub

Actually, pooreva, California has the strictest environmental and health regulations in the world re food, health, auto safety and emissions, etc, etc, you'll notice when you buy stuff there's sometimes a reference to meeting the California requirements. So manufacturers have to meet those standards to sell in California and that makes lots of our stuff healthier and safer than it would be under our own or other USA/state standards.

But I agree re plentiful cheaper food in USA, cheaper to replace nutrition with sugar, fat and/or salt and they seem to love it.

Kidd, I don't see how it would be in corporate Canada's interest to have 100% unemployment, but you may be right about an agenda, I don't know.

Gordon Pape made some comments about inflation in his column within the last few days. He said he believes inflation is coming. He says the US and Canadian central banks have both decided not to hold inflation to 2% going forward. Is this true?
Sounds like another way to make sure the consumer pays for covid.

Loonie said
Gordon Pape made some comments about inflation in his column within the last few days. He said he believes inflation is coming. He says the US and Canadian central banks have both decided not to hold inflation to 2% going forward. Is this true?
…

According to New Economic Challenges and the Fed's Monetary Policy Review, the US Federal Reserve will now hold inflation to an average of 2% instead of to 2%:

…
We have also made important changes with regard to the price-stability side of our mandate. Our longer-run goal continues to be an inflation rate of 2 percent. Our statement emphasizes that our actions to achieve both sides of our dual mandate will be most effective if longer-term inflation expectations remain well anchored at 2 percent. However, if inflation runs below 2 percent following economic downturns but never moves above 2 percent even when the economy is strong, then, over time, inflation will average less than 2 percent. Households and businesses will come to expect this result, meaning that inflation expectations would tend to move below our inflation goal and pull realized inflation down. To prevent this outcome and the adverse dynamics that could ensue, our new statement indicates that we will seek to achieve inflation that averages 2 percent over time. Therefore, following periods when inflation has been running below 2 percent, appropriate monetary policy will likely aim to achieve inflation moderately above 2 percent for some time.
…

I don't know if the Bank of Canada has also made the same change to average inflation targetting.

There will be some new or revived restrictions due to covid, but they are terrified of more businesses going under, which is arguably more important to them than human lives and health, so it won't be directed at them.
It will be directed at individual and group behaviours in uncontrolled settings. They are relying on the fact that PPE, sanitizers etc are now widely available and on schools, businesses and merchants putting protocols in place to keep people apart or at home but still working. The intention is to keep people working.
Clearly, some of this will break down, but they are crossing their fingers that it will not be of such a magnitude that they would be forced by public pressure to go to general lockdowns.

I think there will be inflation for several reasons.
There are increased costs across the board, for pretty well every kind of business or undertaking, in order to deal with covid; these will be passed on. Dentists are the tip of that iceberg.
Second, there are already shortages or sporadic supplies in some grocery items. Low supply leads to higher prices. This likely will increase over winter.
Then there is the problem of things getting across the border. We rely on a lot of imports. Trump is trigger-happy on tariffs generally and has already said that he wants our border with the US re-opened soon - no doubt before the election so that he can claim that he has closed that file. If he decides to do it, he won't care if it's legal. Trade wars always cause inflation.
In addition, if there is increasing civil strife in the US, which I think is very likely, in regards to the election and related issues, it could disrupt transportation from California etc. He doesn't care if California doesn't thrive because they are never going to vote for him. He cares only about the swing states.

I'd like to be wrong. Low-to-no-inflation suits me fine as a saver.

Pape didn't explain clearly why he thought inflation was coming. His focus was on recommending defensive stocks.