Inflation Rate in Canada:
How it works and
How you can Calculate it
Canada’s inflation rate increased to 3.6 per cent in May, the fastest pace in a decade, Statistics Canada says.
This CBC Article confirms what we’ve all been noticing
https://www.cbc.ca/news/business/inflation-may-canada-1.6067484
“Huge jump from a low bar”
- 3.6% in Canada (June)
- Cost of shelter 4.2%
- Appliances (durable goods) 4.4%
- Furniture 9.8%
- Gasoline 43%
https://www.bankofcanada.ca/rates/related/inflation-calculator/
- According to this bank of Canada calculator, from 2000 – 2021, the average annual inflation rate was only 1.90%. A basket of goods that cost $100 in 2000 would cost $148.58 today.
- If we maintained a 3.4% inflation rate, a basket of goods costing $100 today would cost $139.70 in just 10 years
WHAT CAN WE DO?
Planning for retirement is an ongoing process
Cost of things going up means the value of money is decreasing. We are losing purchasing power if our money is not keeping with or beating the pace of inflation.
Therefore, under the mattress may not be the best place to put your money! A savings account is barely any better.
What protects your money from inflation?
- Stocks in companies with pricing power. (If the price of coffee beans were to increase, Timmy’s will be able to pass the cost to consumers)
- Real Estate, including REITs
- Commodities
- Alternative currencies like Gold
How can we help?
- Ensure your investment portfolio is well positioned
- Manage the cash you have on the sidelines
What else can you do?
- Adjust budgets to account for higher expenses
- Optimize your cash by using available tax shelters
- Review opportunities for locking in debt at low interest rates
If you have any questions, we are here to help you.