HIGH INFLATION IS NOT PERMANENT, BUT WILL STAY TILL END OF THE YEAR: BANK OF CANADA

  • Page Views 874
  • Have you ever wondered why prices of just about everything are much higher these days? Maybe it has something to do with the Bank of Canada. The Bank regularly reports its views on the economy and inflation. The Bank of Canada’s mandate is to conduct monetary policy to promote economic and financial well-being of Canadians. Recently, the Bank forecasted a new inflation for the rest of 2021, and 2022.

    These findings and predictions can be found in the July MONETARY POLICY REPORT (released on July 14, 2021). It seems that the Bank is keeping an eye for any changes above or below the baseline 2% inflation rate. In answering the question posed earlier, prices of some items in the CPI (Consumer Price Index, an economic tool that tracks price changes of certain basic items) can be quite volatile. Hence, these price changes and some taxes (eg… GST/HST) can increase prices of commodities. CPI inflation will likely remain at or above 3% through the end of 2021. It may ease up a bit in 2022, and then rise modestly to above 2% in 2023. Hopefully it will go down to baseline 2% in 2024. At least that’s the plan.

    Related to the 3% inflation prediction are 3 factors that led to this price increase in the CPI.
    Firstly, gas prices moved up from very low prices a year ago, and are above pre-pandemic levels. Secondly, prices of items measured by the CPI, that dropped in price last year due to low demand, are now back up due to increasing demand. Thirdly, supply chain issues like shipping bottlenecks (eg.. shipping containers are in short supply), and the worldwide shortage of semiconductors, have influenced prices of certain items that are sensitive to supply constraints, such as vehicles, and home repair products.

    Meanwhile, the Monetary Policy Report tells us that employment rate remains 1.7% points below where it was in February, 2020 (the start of the Pandemic). Those that are unemployed for 52 weeks or longer is at the highest level since the pandemic started. On the other hand, wage increases have remained very mild.

    On the housing front, activity is predicted to remain higher than before pre-pandemic levels. The issue is that strong housing demand, coupled with limited supply, has helped increase house prices from 2020 thru to 2021. There are signs of increased supply of housing. This should improve the balance in housing markets.

    So there you have it. My 2 cents about why price of everything seems to be going up and wages are not.
    And why there is hope in the immediate future. As in everything, believe with a grain of salt, as things are academic till they come to pass(Vincent C. Goleco Jr.)

    Share

    New Posts Recently publish post More

    • 15 February 2024
      5 days ago No comment

      Canada, Philippines ranked in global corruption index

      February 16, 2024 — Transparency International has released its latest Corruption Perception Index, which scores 180 countries and territories by their perceived levels of public-sector corruption. The Berlin-based anti-corruption group’s 2023 CPI scores 180 countries and territories, using a scale from 0 to 100, with 100 being very clean ...

    • 08 February 2024
      2 weeks ago No comment

      Marcos-Duterte alliance splinters

      The rift between Philippine President Ferdinand “Bongbong” Marcos Jr. and his predecessor, Rodrigo Duterte, has taken a turn for the worse. Philippine political analysts say in media reports that this may be end of the political alliance that swept Marcos Jr. to the presidency and Duterte’s daughter Sara as ...

    • 25 January 2024
      4 weeks ago No comment

      Tara na!: Filipinos go for Pierre Poilievre

      VANCOUVER – Members of the Filipino community showed their all-out support to the Conservative Party of Canada as their leader, Pierre Poilievre, held a meet and greet last January 22 at the Holiday Inn Vancouver-Centre. Several Conservative MPs accompanied Poilievre as he talked about the latest issues and problems ...

    • 23 January 2024
      4 weeks ago No comment

      Rewind’ breaks domestic box office records

      MANILA — The 49th Metro Manila Film Fest entry “Rewind” is now the highest-grossing Filipino film in terms of domestic box office sales, amassing P815-million as of January 17. This surpasses the local box office records set by “Hello, Love, Goodbye” in 2019 and “The Hows of Us” in ...

    • 18 January 2024
      1 month ago No comment

      Hala Bira! Viva Sto. Nino! Ati-Atihan celebration in Vancouver

      ATI-ATIHAN 2024 Hala Bira! Viva Sto. Nino! Ati-atihan celebration in Vancouver last January 6, 2024   AKLANON STO. NIÑO ASSOCIATION OF BC ATI-ATIHAN 2024 Officers Renante Itulid ( Board of Director) Teodulo Inamac ( Board of Director) Kent Napat ( Assistant Secretary) Liza Napat ( Board of Director) Bernadette ...

    %d bloggers like this: