Chapter 5 – Economic Indicators
“Gas ignites inflation's rise”
Source: The Vancouver Sun
Canada’s annual inflation rate increased sharply last month according to Statistics Canada. This result is mainly because of the high gasoline prices and rising housing costs. The rate increased by 2.0 per cent from last year. This is the biggest one-month gain since Hurricane Katrina struck in September 2005. The main inflation jump is blamed mostly on the increase of gasoline prices. In British Columbia, gas prices at the pump increased by 9.2 per cent between January and February of this year. The 2.0 per cent inflation increase over the year “contributed to the increase of mortgage and homeowner’s replacement costs,” said Statistics Canada. Mortgage interest costs rose by 5.3 per cent, which was the fastest increase since February 2001. Homeowner’s replacement cost matured to 7.1 per cent, after following another 7.6 per cent increase in January. The average prices of goods and services increased in all 10 provinces, however they rose faster than the normal average between February 2006 and 2007.
Relation to Chapter 5 – Inflation
The general level of retail prices increasing is a certain sign that we are facing inflation. To more extreme cases, the result in prices of goods and services may become higher and higher and eventually become out of control. In my opinion, I see inflation as a negative thing for many citizens in British Columbia. Most of all, price increases hurt people on fixed incomes, for example pensioners, who have no other source of acquiring income. As price and services increases, the purchasing power of Canadian dollars become less and less. Citizens will have a rough time dealing with the fact that what they purchase now will increase significantly later on.
The prices of products may rise so greatly that may ultimately be unaffordable since most of many citizen’s income already go towards the necessities in live or at least in Canada. Inflation can obstruct Canada’s position in world markets if products created domestically become too expensive and foreign buyers seek different suppliers. In addition, high inflation rates will affect small business because of the possible increasing interest rates of bank loans. Employees will start to demand increase in wages to keep up with the cost of living, which would most likely drive businesses down to bankruptcy.
All in all, I feel that any increase to the inflation rate will create many problems and uncertainties in the future. Buying habits will alter drastically, which may lead Canada into a depression. I think that households and businesses should purchase goods, like houses, that speculate prices to rise in effort to protect themselves from rising prices.
Source: The Vancouver Sun
Canada’s annual inflation rate increased sharply last month according to Statistics Canada. This result is mainly because of the high gasoline prices and rising housing costs. The rate increased by 2.0 per cent from last year. This is the biggest one-month gain since Hurricane Katrina struck in September 2005. The main inflation jump is blamed mostly on the increase of gasoline prices. In British Columbia, gas prices at the pump increased by 9.2 per cent between January and February of this year. The 2.0 per cent inflation increase over the year “contributed to the increase of mortgage and homeowner’s replacement costs,” said Statistics Canada. Mortgage interest costs rose by 5.3 per cent, which was the fastest increase since February 2001. Homeowner’s replacement cost matured to 7.1 per cent, after following another 7.6 per cent increase in January. The average prices of goods and services increased in all 10 provinces, however they rose faster than the normal average between February 2006 and 2007.
Relation to Chapter 5 – Inflation
The general level of retail prices increasing is a certain sign that we are facing inflation. To more extreme cases, the result in prices of goods and services may become higher and higher and eventually become out of control. In my opinion, I see inflation as a negative thing for many citizens in British Columbia. Most of all, price increases hurt people on fixed incomes, for example pensioners, who have no other source of acquiring income. As price and services increases, the purchasing power of Canadian dollars become less and less. Citizens will have a rough time dealing with the fact that what they purchase now will increase significantly later on.
The prices of products may rise so greatly that may ultimately be unaffordable since most of many citizen’s income already go towards the necessities in live or at least in Canada. Inflation can obstruct Canada’s position in world markets if products created domestically become too expensive and foreign buyers seek different suppliers. In addition, high inflation rates will affect small business because of the possible increasing interest rates of bank loans. Employees will start to demand increase in wages to keep up with the cost of living, which would most likely drive businesses down to bankruptcy.
All in all, I feel that any increase to the inflation rate will create many problems and uncertainties in the future. Buying habits will alter drastically, which may lead Canada into a depression. I think that households and businesses should purchase goods, like houses, that speculate prices to rise in effort to protect themselves from rising prices.
posted by alvincheung at
11:12 PM
3 Comments:
Though inflation is inevitably apart of the economy, we'd have to face it sooner or later. I also did a blog on the increase percentage in gas prices and I must add that our views are nearly the same. The cost of living in Vancouver alone is outrageously high, and people with fixed income have a lot to worry about. Like the saying goes, a dollar today cannot buy what a dollar is tomorrow...I know that's not the correct saying, but you know what I mean.
By
ineedalie, at 7:08 AM
This comment has been removed by the author.
By
sheboo89, at 8:15 PM
I understand your point of view why inflation has negative impacts on the economy such as those on fixed incomes (pensioners…), which can potentially hurt their standard of living if inflation increases. However, I would like to argue that unless the economy experiences a hyper-inflation (as Germany did during the Great Depression), people with a fixed income would not be greatly affected by inflation because on average, inflation is about 2-3% per year though they may feel a pinch from it. Also, inflation indicates growth in the economy, growth in the industries and growth in the country as a whole so having inflation does not necessarily indicate a bad thing for the economy.
By
sheboo89, at 8:16 PM
Post a Comment
<< Home