Inflation level really not as high as it seems: Report
For many Canadians, higher inflation is a foregone conclusion. It’s no longer a matter of if we will experience it, but how soon it will be here.
And if consumers truly believe prices will be higher in the future, they should be out buying goods today. After all, why wait for higher prices?
But what if, as a recent C.D. Howe Institute paper argues, Canada's inflation is actually quite a bit less than advertised?
According to McGill University economist Christopher Ragan, the way Statistics Canada measures changes to the cost of living regularly causes to overstate inflation.
Stats Can says inflation is running at 2.4 per cent. But Ragan’s figures suggest it’s closer to 1.8 per cent.
That’s because the agency doesn't often adjust the weights of the various goods within its "basket" to reflect shifting tastes among Canadian shoppers.
It’s bad enough to live in a world in which the value of our money is continuously eroded by inflation but even worse when we don’t measure this erosion accurately, Ragan says.
Consumers may see it otherwise, of course, but Ragan maintains that's because we tend to fixate on a few frequently purchased items as food and gasoline.
The things we buy less often – electronics, say, or furniture and appliances – are likely to be much less volatile, even declining in price or at least rising much more gradually, he argues.
The report pegs the cost to the public purse at hundreds of millions of dollars annually since, if Ottawa were to revamp its calculations, Canadians who receive pensions and other social payments that are periodically increased to match inflation would see smaller increases in the future.
To say nothing about higher taxes since all the basic deductions on your tax return are indexed as well.
What do you think: Do published inflation numbers even come close to reality? Are you seeing prices rise on the goods and services you buy?
By Gordon Powers, MSN Money
Posted by: LJPS | Mar 17, 2022 12:32:59 PM
I dont know about Mr Ragan, but I am certain he does not fo the grocery shopping in his houselhold. For ecample, 18% cream which I bought in January cost me $4.99, I went last week to buy more and it was $5.99 and that is only to mention one item. Based on food basket and gas prices, I believe the rate is slightly higher than the Stats Can report of 2.4%
Posted by: Roberta Colwell | Mar 17, 2022 12:53:10 PM
Since the average consumer who is feeling the "pinch" does not buy large ticket items unless absolutely necessary, they are not going to agree with Mr. Ragan's analysis. When we are hit at the gas pump every week and at the grocery store far more often than that and are scaling back on the "fun" in life, 2.4% sounds low.
Posted by: nottobrite | Mar 17, 2022 1:36:12 PM
For those idiots that think the inflation rate is that low should try it from the low income bracket . With oil, hydro, gas going up every day and to top it off the H.S.T. all controled by our goverment. I guess they don't remember what started the recession .Keep going the way you are and you will be printing new money again . Instead of worrying about a fall election , which no one wants , put your heads together and help the people out and in turn the people will help the country out then we have a win win situation .
Posted by: Jacob | Mar 17, 2022 11:35:14 PM
LOL!! Another emperor without clothing! When are our leaders going to stop lying to us? Not only grocery shopping.Do these people not cut the cheques for rent or have relatives checking out home prices?Don't they pay property taxes?How about hiring a contractor to fix up the old shack?
Commodities have gone ballistic.
It seems the governments don't want to pay a reasonable interest rate on their crippling debts so they have been distorting the figures for a long time.Amazingly, I haven't heard anyone exposing them on the business channels!
Posted by: chestre | Mar 17, 2022 11:47:23 PM
Totally unrealsitc. Not only has most food gone up, but as mentioned impact of HST, taxes on taxes, insurance, gas, property tax increases and on an on... Real impact on inflation must be more in the 5% range...
Posted by: John | Mar 18, 2022 4:25:37 AM
I had Statistics Canada both call my home and come to my door that in my opinion bordered on harassement.
They threatened me with statements like "You have to give me the information I am requesting, it's the law".
First the canadian givernment is a joke and not to be trusted
Second my income and my relationship status and what I do for a living is no one's business but my own, you want to know where I am working go look at my T4's the last time I did my income taxes.
If statscan shows up or calls and wants any information tell them your moving, speak a foreign language (I used no speakez englaise) and if they insist and harass the living crap out of you lie to them.
The only thing any government and survey companies has ever done with any information they have collected is used it to rip us off for as much money as possible.
And to any statscan employee here's a tip if somene does not want to talk to you GO BUG SOMEONE ELSE THERE'S LOTS OF OTHERS WHO WILL TALK TO YOU VOLUNTARY
Posted by: peter secord | Mar 18, 2022 7:25:36 AM
That study is bull its not the discretionary
spending items that is the problem its gas food energy in general after those expenses how much is left for discretionary spending when you raise a family of 5 in total forcing mothers into the workplace even when they would like to stay at home and raise their kids but nope lets drop them off at daycare so they can be ignored and raised like drones so we can put gas in our cars and food on the table cause dads 60 hours a week cant seem to do it unless your last name is buffet or gates the cost of living is ultimately going to be societies downfall as more and more of our kids fall through the cracks i find most governments have failed their peoples in controlling the cost of energy much less the huge taxes tacked onto them visa vie CANADA why not try putting some serious money back in the pockets of the people that earn it so they can stimulate economies and start to tariff items that are built with basically slave or child labor in third world countries and bring back manufacturing jobs where they belong right here at home
Posted by: Northern Ontario | Mar 20, 2022 10:49:33 AM
OAS and CPP is based on the inflation rate. That is why the government confirms the rate as low as possible. The inflation rate is based on a basket of goods the goverment set as the standard based on necessary items to live on. I don't know what they are but I suspect stuff like HD TV, gas for a 2nd vehicle, Insurance for a 2nd vehicle...... is not in the equation.
I am fortunate enough to pay for the extra cost of items incurred in the past 2 years but I truly feel bad for those on fixed income. Basic needs such as rent, electricity, water, city taxes for homeowners, food, gas for car owners and all insurances have all risen more than the stated inflation rate of approx. 2%. If you compare the cost of these items from last year, it is certainly more than 2%. That's where the Government is really out of touch with reality. I've said it before in other blogs, many of these companies including municipalities will raise their prices by a minimum of the stated inflation rate. So if the price increases by 2% and your salary increases by the same, after your taxes, you really just have 1.4% left over to pay the true 2% increase on goods. So you are short by 30% year over year to pay these added costs. For those of you not yet retired, make sure you set aside a little more. You wil be in the same position in the very near future.
Posted by: 1457Island | Mar 21, 2022 5:08:36 AM
Sadly the CD howe has lost credibility with me, I know my life is more expensive. They say the cost of electronics and appliances are down but what they don't say is we have to replace them more often adding to our overall expence.(Remember when you bought a sunbeam toaster that was made in Toronto it would live longer than most of us.) We don't fixate on fuel it's a critical part of our bugets.
Posted by: zakimar | Mar 21, 2022 6:10:06 AM
OF COURSE the rate is a scam! When the government leaves out "volatile" items like food, fuel, and shelter - the most basic NECESSITIES, the rate will be low. Unfortunately, the ONLY way to get ahead with such a crooked government is to work for CASH and invest that extra money for your own retirement, as the government won't be taking care of anybody but themselves (see the kind of increases they give themselves).
Posted by: ana | Mar 21, 2022 10:33:08 AM
As alot of you'se have said the government is out of touch or don't care, all they care about is keeping their job long enough so they can collect their full pension in what 5 years? Where most of us have to retire and then they tell us to make sure you put so much money away for your retirement. There is not enough money left out of our pay cheques any more to put money away! I got layed off last Nov. and then the company I worked for filled bankruptcy, we got nothing but screwed around then and now come income tax time we will get screwed again, so how is a person suppose to get, or have anything extra when companies get to screw people like they do and get away with it from the government! I have not found another job yet and will not get the same money I was getting before, and try to pay things with unemployment, which is so much money these days.
Posted by: Jacob | Mar 21, 2022 11:07:41 PM
Best of luck Ana.Keep your chin up.Something good will come of this.A new job,a new adventure.
Jacob
Posted by: chrisvb | Mar 22, 2022 11:34:30 AM
This rate of inflation is not the reality of the situation . The writer of this article could not have been to the supermarket lateley , nor has he examined his municipal tax and fee bills. the increased cost of fuel , (home , car etc) alone is enough to make a tight home budget an "un-workable " budget
Posted by: Jacob | Mar 22, 2022 8:14:22 PM
C D Howe is batting 0-12 on this board.Oh ye of little faith.(he,he)
J
Posted by: pederson | Mar 24, 2021 11:32:13 AM
Why was it that you could 30 years ago go buy one loaf a bread for 10... 10 for a buck and you are hard pressed to get the same loaf one at atime for under a buck Big business greed thet get the cuts and we get the taxes
Posted by: John Dickson | Mar 26, 2021 11:03:06 AM
I don't know where this person got his/her information from but obviously he/she has not spoken with the average tax payer of this country. A lot of us have not seen wage increases in years and when we have its been 1% or 2% which does not even meet the cost of living and pensioners who are well below the poverty line who realy need a boost in what they are receiving from our so called governmet who decided to increase the supplimental pension by $600.00 a year or $12.50 a week which will do what for a pensioner who is not making ends meet, and what has this or any government done to exempt pensioners from taxes, have they not paid their dues. Wake up, a lot of the tax payers of this country are still in a resession no matter what the government says. The governments of this country need to look at reducing taxes and putting money back into the tax payers pockets. WHEN IS THIS EVER GOING TO HAPPEN.
A VERY UNHAPPY CITISEN OF THIS COUNTRY.