If you have watched or read the news lately then you will have heard about the “unprecedented” inflation as of late and I wanted to break this down a little. Inflation simply means the rate at which a dollar loses value over time. This is shown in the increase of the average price level of a basket of selected goods and services in an economy over some period of time.

StatsCanada released their Consumer Price Index (Inflation) report for October and, across Canada, CPI rose 4.7% on a year-over-year basis in October, up from 4.4% in September. This was the largest gain since February 2003. Energy prices were up 25.5% year over year in October, primary driven by an increase in gasoline prices. Passenger vehicles remained high compared with October 2020, increasing 6.1% year over year amid a global shortage of semiconductor chips. In addition, prices for passenger vehicles, accessories and supplies rose 3.6% year over year. Prices for meat products (+9.9%) continue to rise in October, as fresh or frozen beef (+14.0%) and process meat (+8.5%), which includes bacon (+20.2%), put upward pressure on prices. Labour shortages that have slowed down production, ongoing supply chain challenges and rising prices for livestock feed continue to factor into higher prices for meat. In British Columbia, this year we had the highest increase in property tax (+5.6%) compared to the other provinces. This increase in property tax was in part because of higher assessment values.

 To be able to assess whether this is high or low compared to other years, I wanted to look at the CPI in British Columbia over the last 5 years. What the data tells us is that inflation between 2019 to 2020 was almost zero (0.5%) and inflation from 2020 to 2021 was 3.8% so we are simply playing catching up to the 5 year average (2.4%). Gasoline saw the highest percentage change of 33% from 2020 to 2021 but it also saw the most percentage loss (-18%) from 2019 to 2020. Energy, which includes electricity, natural gas, fuel, etc., was the second highest percentage change of 21% from 2020 to 2021 but it also saw the second most percentage loss (-10%) from 2019 to 2020.

We can eliminate Gasoline and Energy from the equation and things seem to be pretty normal, spanning between 0.1% (Clothing and Footwear) to 5.8% (Goods in general).

Want to chat about it? Email me at info@financerx.ca