Is inflation dead?

April 18, 2013

Is inflation dead?

Recent media reports would lead you believe that.

The Globe and Mail reported on April 17 that we could thank Target Corp. and the foreign retail invasion for “today’s low prices.”

This was contained in a report on the Bank of Canada announcing that inflation has remained low in recent months. The slow level of inflation, at an average of 1.2% in January and February, reflects muted prices across a wide range of goods and services.

However, taking a longer-term perspective can quickly demonstrate inflation’s erosive power.

For example, since 2000, in an era of seemingly low inflation, prices have risen 29.64%. That’s at an average annual rate of inflation of 2.02%.

In other words, an item with the price of $10 at the turn of the century now costs $12.96.

To learn more about the ravages of inflation the Bank of Canada has a nifty online calculator.

 

 

 

 

 

According to Stats Canada, the CPI index rose 1.2% from February 2012 to February 2013. As of 2012, CPI index increased 21.7% since 2002]