September 2021 Inflation | Page 3 | General financial discussion | Discussion forum

I think the chance of a Wednesday hike is close to zero. And that its largely for political rather than monetary reasons. And that it will lead to a larger and quicker rate hike than generally anticipated. We’ll need to get back to this discussion in 6 months’ time.

It is quite simple, in my opinion.

Prices keep going up and they will not be going down.
Interest rates keep going down and will not be going up, for a while.

Real estate follows inflationary pressure, if you expected to live your senior years in a house you've already bought, mortgage free - expect paying way more in property taxes when reassessments start coming.

People who saved money for retirement and trusted their retirement savings will be protected by wise policies of the government - have been mistaken in their expectations.

The best part: we just voted in federal elections same people who devalued our savings to keep running the country.
Even better part: there is no guarantee if any other party was voted to the power they would have done anything differently.

Norman1 said

Vatox said
The problem is that you are talking a different language. It isn’t wrong, but those that may come here and read your statement that inflation is moderating, it’s feeding them misinformation that conflicts with what the masses are saying and reporting. And that’s bad because you aren’t clarifying your perspective correctly. What you should be saying is that you prefer looking at month to month CPI changes as inflation and deflation. Don’t tell people that inflation is moderating because according to the mainstream view, it’s currently accelerating.…

It is a mathematical fact that CPI prices have been climbing at a steady 6% per annum from January to July and that the climb has moderated to a lower 2.6% per annum for the past two months.

It is actually you who is spreading misinformation and manufacturing fake news by misrepresenting the increasing year-over-year CPI number as showing accelerating inflation. The numbers don't in this case because of the hockey stick shaped CPI values.

The increasing year-over-year CPI numbers are actually just showing an increasing number of months of each rolling 12 month period having 6% per annum inflation and fewer months having near zero inflation. That's it!  

The pace of inflation increase may be slower than it was, but the gap between target inflation and actual continues to increase continuously and significantly.

If the horses pulling my carriage get spooked and keep increasing their speed, we are going to have an accident, and it won't matter that they don't increase their speed as fast as they did initially and they aren't going as fast as they could be. I will only be safe if they manage to get back to normal before we have an accident.

At present, we really don't know where this is going. To the extent that predictions are largely based on covid effects, which appears to be the case, I find them quite inadequate.

Bill said
Another reason interest rates aren't going up - cash is all around, per Oct 13 Globe and Mail article:
"Canadian consumers typically hold about $40-billion in cash accounts, but now have a combined $310-billion on hand." The article indicates that number goes to $500 billion with extra business deposits lying around.  

Agreed there is all that CERB/CRB cash lying around plus lack of spending during the pandemic. Interest rates and inflation will go up if a lot of that $300B is spent by consumers too quickly heating up the economy.

AltaRed said

Off-tangent for this thread, but I have no idea why this misinformation continues to permeate social media. It is so wrong in so many ways. If everyone's house goes up 10% in value and the tax base and tax revenue needs don't change, property tax bills do not go up. The mill rate goes down 10% and taxes paid remain the same.

What happens in reality is: 1) some houses increase in market value faster than the total of the tax base and those will see a higher tax bill while others will see a lower tax bill, and/or 2) municipality revenue needs exceed the growth in the tax base and the mill rate has to go up to compensate.  

I have owned various homes for over 40 years and the taxes have gone up almost every year. Who do you think pays for the increase in the employees wages let alone the rising cost of supporting the infrastructure ?

I'm not complaining because the rising value in the home almost offsets the tax increase but your post imo is a bit off base.

AltaRed said
... while others will see a lower tax bill ...  

I never saw a lower tax bill, since I became a home owner. I expect it to go only up, especially now, when municipalities are also impacted by the inflation and rising labor costs.

Righand said

I have owned various homes for over 40 years and the taxes have gone up almost every year. Who do you think pays for the increase in the employees wages let alone the rising cost of supporting the infrastructure ?

I'm not complaining because the rising value in the home almost offsets the tax increase but your post imo is a bit off base.  

No, my comments are 100% accurate. You didn't actually understand it. I said if tax revenue needs did not change, and the tax base did not change (no new development), and market assessments all increased the same amount, there would be no property tax increase for anyone. That is simple arithmetic.

The reality is tax revenue needs do increase due to increases in operating costs. Purchased goods and services, municipal wages, etc. by approximately the rate of inflation (in the absence of new tax base from development and in the absence of other revenue generation such as fees and gov't grants).

New tax base (new developments) will help offset some of the increase in revenue needs but few municipalities can increase their tax base each year by the amount of inflation, so we all, collectively, pay more in taxes. In a very simple example, if revenue needs increase 3% but new tax base only increases 1%, then property taxes need to go up 2%.

MVA has been around a long time but it is amazing how many people don't yet understand how that fits in with tax revenue needs, tax base, mill rate, etc.

Vatox said
Okay, so what are you saying Norman1? That all the top money policy minds are wrong to use year-over-year values? I can see you like month-on-month better and I actually agree with you, it’s a better perspective for what’s actually happening in a shorter time span. But you also to try to represent the numbers the other way also, you look at 2 or 3 years to blend the changes. It’s as if you want to take whichever perspective fits your agenda, at that moment, better.…

The top money policy people are not relying on those year-to-year values alone. They know better than that.

The Scotiabank economist interviewed in the video Dean mentioned refers to the annualized 5% to 7% inflation shown by the monthly CPI values. He is aware of the hockey stick shaped CPI values.

Bank of Canada takes the CPI data to calculate core inflation.

I use the numbers that best represent what is happening. When the monthly CPI values hug the line for the year-over-year statistic, then the year-over-year statistic accurately represents reality. When the values don't, then the year-over-year value is meaningless.

When the stores have inventory levels of 3, 4, 3, 4, and 5 items, the average inventory of 3.8 items/store is an accurate representation of reality.

When the stores have 50, 0, 0, 0, and 1, the average inventory of 10.2 items/store is seriously misleading and obscures why most of the stores are complaining about a supply issue.