October 2021 Inflation | Page 8 | General financial discussion | Discussion forum

When you reach a certain age or have certain health concerns, convenience gets to be a really important factor. Perhaps her family could pick stuff up for her, escort her to the store, or put in a delivery order for her. Or maybe they are useless, so she does what works for her. Some elderly people think they are much worse off financially than they are; it's quite common.

That said, I've never heard of a retirement home that didn't offer full meal service, and I have been in plenty of them in more than one jurisdiction. That's one of their big selling points, that you no longer have to look after meals.

Since covid started, spouse and I have had everything possible delivered. Yes, it costs a little more but I am happy this option is available at this time. It keeps us a lot safer, avoids trips in inclement weather, and discourages impulse buying.

Norman1 said
Not deflation is necessary.

Just have inflation under 2% per annum for a while and prices will eventually meet the target line for prices going up 2% per year.  

To water down a 6-7% inflation to 2% average will take a long time.
Transitory means it wont be 6-7% long term, but it aint back to 2% average over the next 3 years either. If someone think transitory means by 2022, it is not going to happen.

The big question though, and the one being correctly debated, is how soon will underlying price growth on certain segments of goods and services be tamed and cause CPI to return to trend line, either on it or with some degree of offset. Some of the surge is now over, e.g. energy prices for oil and gas, prices of which we have not seen since the collapse of the super commodity boom of 2015. Food inflation is not over as currently forecasted for 2022. That might be more of a climate change question and result in a new reset for food over the long term.

The other big one is how soon will supply chain 'fixes' fix the rest of it, e.g. semi-conductors which has pressured vehicle prices and related goods. Or will the push for EVs now cause a new reset for vehicle prices and electricity prices? Lots of questions and levers on certain aspects of our consumption.

I agree there will be a few structural changes but some will be one time changes, e.g. costs of EVs vs ICEs, and in a few years, EV costs may actually increase slower than CPI, sort of like consumer electronics that come down in costs over time. Certainly operating costs will come down and pay for that EV and then some over time. IOW, not everything folks assume is structural will have lasting impacts.

This G&M article is worth a read (don't think it is behind paywall). It addresses forum member issues with inflation while at the same time recognizing the key issue is the lag associated with implementing CPI increases in our taxation and benefit system.
https://www.theglobeandmail.com/investing/personal-finance/taxes/article-on-inflation-indexing-chrystia-freeland-is-ahead-of-her-time/

The last paragraph reinforces how the CERB et al programs actually helped the bottom 40% of the nation's families, almost doubling their share of national wealth from 1 to 1.7%. It can't be denied how the programs lifted more folk out of poverty over the pandemic period, while at the same time, the lag in CPI catchup of current YOY inflation numbers will have negative impact on the same group of families trying to balance their budgets.

That has been the plan for some time. Maintaining the work force and some population growth is fundamental to GDP growth, especially in the absence of productivity growth that Canada continually seems to struggle with. One only has to look at places like Italy and Japan for examples of economies going nowhere due to declining populations and declining workforces.

Norman1 said
We are actually not that far above one of the 2% per annum trajectories.

If CPI were held at the current 143.9, it would meet the 2% per annum line from January 2020 in August next year.

That pandemic during 2020 had already watered down much of the 6% per annum inflation.  

u mean if there is no inflation btw now and Aug 2022, then it will still be a 2% per annum ? With food prices schedule to rise 5-10% next year, and everything that I spend money on (my physio just advised me on 5% price increase Jan1) ARE going up in price, its hard for me to see CPI coming back at 2% any time soon.

Vatox said

AltaRed said
That has been the plan for some time. 

Maybe so, but the labour force is decreasing fast, so they aren’t even holding the line let alone growing it!  

There has been a slide over the past decade with participation percentage declines but that is being turned around with more aggressive immigration policy of working age individuals. Immigration of about 400k per year will create labour force growth. Obviously didn't get there in 2020 due to covid and maybe not in 2021 but 400k is government policy. It is buried in government (budget? economic update?) data of 2? years ago.

Here is one example of forecast growth that may come from StatsCan (StatsCan site has been down) https://www.statista.com/statistics/787267/labor-force-size-forecast-canada/

Not nearly as dire as one might expect. Canada is at least smart enough to embrace immigration, contrary to several of our Caucasian counterparts.

Universal Basic Income in its simplest form will simply result in massive increases in residential property value and cost, and thus enriching of the property-owning class.

Increasing population to kick the debt down the road will also trigger housing inflation. We need to eliminate residential housing as an overly favoured investment. There's a very large vested interest in it, though, creating terrifying political pushback.

Residential property is not a good that can justify its cost - unless buyers count on massive value increases. Between maintenance and loan interest, the apparent huge profits made by homeowners shrink a lot. The real, solid investment value lies in owning property to rent to someone else.
RetirEd