It's Just An Economy

Money will print itself:

How big of a raise did you get last year? In Canada or the U.S., if it wasn't in the four to five per cent range you really did not get much of an increase at all. 

On Wednesday, after a year of repeating that he wasn't going to discuss cutting back on monetary stimulus, the world's most powerful central banker, Jerome Powell, finally changed his tune.

The chair of the U.S. Federal Reserve said he and advisors are now "talking about talking about" cutting back on bond buying — a key part of stimulus during the pandemic, and the bank signalled interest rates hikes could come in 2023.

But as prices in Canada soared by 3.6 percent, hot on the tail of U.S. inflation currently running at five per cent after that economy opened up sooner, it is by no means clear those efforts will give you back the money you've lost. 

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A new study by the Angus Reid Institute out this morning finds that just as we are about to emerge from 16 months of pandemic hell, Canadians are struggling with a side-effect of the ordeal — rising prices.

Official inflation data out yesterday revealed that Canada’s consumer price index rose 3.6% from May 2020, the biggest increase in a decade.

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With Canada’s annual inflation rate seeing a record increase last month, some economists say certain sectors will eventually level off as the economy recovers from COVID-19, while others might continue to see increased demand — and prices — for the foreseeable future.

Canada saw its largest ever annual inflation rate spike in a decade, with a 3.6-per cent increase in May.

The spike, reported by Statistics Canada Wednesday, outstripped the previous year-over-year record of 3.4 per cent seen just two months earlier in April.

Several experts said last month’s annual inflation rate, which rose at a rate not seen since 2011, was in large part due to its comparison to that of the low prices spurred on at the start of the COVID-19 pandemic last year, which saw several segments of the economy devastated. ...

“Gasoline prices, for example, collapsed last year and now they’re back up to where they were prior to the pandemic and that creates a lot inflation on paper,” he said, adding that 40 per cent of that 3.6-per cent inflation rate alone came from gasoline prices.

The same would also go for clothing stores and airline tickets as people begin to be able to visit stores again and travel, he said, though those inflation rates would most likely slow down heading into 2022.

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Well, nothing is free:

The Commons yesterday by a 285-36 vote rejected a national dental care program. Free dentistry for low income households would cost about $1.6 billion a year, according to the Parliamentary Budget Office: “This is a problem we can fix and we must fix.”

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Well, that could have happened to anyone:

Revenue Minister Diane Lebouthillier in a report to Parliament said her own agency defaulted on more than $200,000 in credit charges. The costs were run up on government-issue credit cards used by employees: “We note the increased pressure to spend budgets at fiscal year-end.”

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Again, no big deal:

The travel ban does not affect trade in goods but Statistics Canada said total exports of services in 2020 compared with 2019 fell by 17.7 per cent and imports of services plunged by 24.0 per cent, in part due to the border restrictions. Travel and transportation services were particularly hard hit.