Oh Canada! Home to...inflation??
Have you felt the impact of inflation? Perhaps the drastic increase in prices of eggs, fruit, and gas. (To name a few) ring a bell?
What exactly is inflation? Inflation is the price increase of general goods and services within an economy over a period of time. Unfortunately, inflation is seen often and is only growing in today's society. But why is inflation bad? Inflation means increased prices, thus fewer consumers, which ultimately leads to a decrease in the standard of living for people and their families as they cannot afford the same goods and services as they once could. However, the negative factors of inflation don't just stop there. The economy will then be unpredictable as it makes it difficult to make life decisions, such as buying a home or car, as inflation increases interest rates. The unpredictability causes slower economic growth, and more individuals are left unemployed because there is not enough money to keep things running or have a lot of employees.
Just within January 2023, the consumer price index rate was at 5.9, which is an increase of 4.9% compared to January 2021, where the CPI was at 1, and the numbers are only climbing. (1) However, the economy constantly changes, and what goes up always comes back down. Across numerous households within Canada there has been widespread fear over inflation and the consequences it may carry, and many have felt the effect of job loss throughout the COVID-19 pandemic. Low income households are already struggling to begin with, add inflation and job loss on top and you are witnessing the beginning of a downfall. The cost of living is soaring through the roof, we have all seen it or felt it in some way. Groceries, furniture, vehicles, you name it and it has seen a price inflation, it is visible in every area of daily life. Even middle income household have felt the effect of inflation, whether it is restricting spending or being tighter with bills there is a fear flowing through the country. This all sounds familiar, doesn’t it? Well that is because it has happened before, and recently. In 2008 the United States experienced a market crash of monumental proportions. The fear Canadians have today is that the 2008 crash is happening again and no one can stop it. While this may be a ways away from this point, it is a looming threat over the heads of every homeowner and loan holder in the country.
The critical factor to know now is to be smart with your money. This means learning how to budget appropriately to ensure you are in a comfortable state—taking advantage of coupons and setting up saving accounts to allot a certain amount of money to grow without being touched. And cut unnecessary spending where you can! For instance, making a coffee instead of buying one, making meal prep for the week and not spending it on takeout meals or trying growing a mini herb or veggie garden in your kitchen or backyard! While this all seems meaningless, over time, you save money in the long run and learn better spending habits that will aid you for years and perhaps even a fun hobby. It is easier said than done, that is no secret, but with the support of others it is possible. Bear down with those around you and support each other, help each other, and believe that there is a prosperous way out of this, because there is and it is possible. Don't let inflation consume you; rise above it.
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“Inflation: Definitions, Graphs and Data.” Bank of Canada, https://www.bankofcanada.ca/rates/indicators/capacity-and-inflation-pressures/inflation/.