Inflation cools to 2.8% in June, But prices at the grocery store rose 9.1%. "Actual" inflation higher than "official" inflatinon

[CdnFox]

https://financialpost.com/news/economy/canadian-inflation-falls-june

"The rise in consumer prices decelerated again in June largely due to a drop in gasoline prices, but costs for shelter and food are still putting a strain on Canadians’ wallets, evidence that bringing inflation down to target will be a tricky balancing act for the Bank of Canada.

Statistics Canada said elevated grocery prices, up 9.1 per cent, and mortgage interest costs, up 30.1 per cent, contributed the most to the overall increase of 2.8 per cent."

And remember mortgage rates have a massive impact on rental costs.

So here's the problem.  It may very well be true that overall inflation is only up 2.8 percent . But for most people, The two biggest costs in their monthly lives is Shelter and Food. People are now paying 2000 - 2500 for a one bedroom apartment - and 2 older adults will spend an estimated 640 bucks a month in food.  Sure - your cell phone bill may go down 10 bucks but if your food prices are expected to jump 64 bucks a month on average that's not helping,  And if you work from home or the company pays your fuel that gas reduction isn't doing much for you either.  And with rents in many areas shooting up 10 - 20 percent a year...  your ACTUAL inflation is going to be a lot higher than the 'official' rate.

 

So while "inflation" is getting lower, Actual inflation for a lot of people is still out of control and that's going to lead to stagflation or worse.

 

[Moonbox]

4 hours ago, CdnFox said:

So while "inflation" is getting lower, Actual inflation for a lot of people is still out of control and that's going to lead to stagflation or worse.

Inflation is getting lower and it's now within the BoC's long-term target range.  Choose whatever measurement you want (core, headline, CPI/PCE), it is going down.  It may affect different people in different ways, but you can't cherry-pick the folks affected the worst and then exaggerate its effect across the board.  

Grocery prices are a big problem for poor folk, as are rent increases for the poor folk not protected by rent control, but those are specific problems without easy policy decisions and seemingly not ones that good 'ol Justin is likely to tackle.  

[CdnFox]

8 minutes ago, Moonbox said:

It may affect different people in different ways, but you can't cherry-pick the folks affected the worst and then exaggerate its effect across the board.  

Cherry pick? Tell me - which canadians DON'T have housing or eat food?

8 minutes ago, Moonbox said:

Grocery prices are a big problem for poor folk, as are rent increases for the poor folk not protected by rent control,

You're out of date.  Both have become very serious problems for the middle class, and quickly moving upwards. The price of housing is quickly becoming close to half the average income. 

And with both of those still climbing at very high rates, the MAJORITY of people will still be feeling inflation far in excess of what the 'official' rate is. Not a 'cherry picked' group but most canadians. Housing and food are the two biggest bills for most people, possibly car payments beating food but not by much.

 

 

[eyeball]

2 hours ago, Moonbox said:

Grocery prices are a big problem for poor folk, as are rent increases for the poor folk not protected by rent control, but those are specific problems without easy policy decisions and seemingly not ones that good 'ol Justin is likely to tackle.  

Higher grocery prices were/are inevitable given the impact of weather/climate factors affecting production. The BOC has, apparently, just woke up to climate change.

As for the specific problem of higher interest rates causing inflation and higher housing costs the BOC could make a significant difference with the stroke of a pen.

Instead the BOC continues to act as if it believes these factors are the fault of the people most affected by them.

 

[myata]

We love the inflation and monopolies here! Inflation is great for monopolies and MP salary indexations and so it.. just happens.

Edited July 19, 2023 by myata

[Moonbox]

4 hours ago, CdnFox said:

Cherry pick? Tell me - which canadians DON'T have housing or eat food?

Better yet, tell me where I suggested they didn't?

4 hours ago, CdnFox said:

You're out of date.  Both have become very serious problems for the middle class, and quickly moving upwards. The price of housing is quickly becoming close to half the average income. 

People don't qualify for mortgages if housing would be half their income.  They don't qualify at 35% either.  There are no doubt some extremely unfortunate renters out there not covered by rent control, or some over-leveraged speculators eating shit, but that would be a fraction.  

4 hours ago, CdnFox said:

And with both of those still climbing at very high rates, the MAJORITY of people will still be feeling inflation far in excess of what the 'official' rate is.

That's not how the math works.  The MAJORITY of people are being accounted for in the inflation statistics already.  

4 hours ago, CdnFox said:

Not a 'cherry picked' group but most canadians. Housing and food are the two biggest bills for most people, possibly car payments beating food but not by much.

Yes, but the inflation stats are weighted to account for that.  ?

[Moonbox]

2 hours ago, eyeball said:

As for the specific problem of higher interest rates causing inflation and higher housing costs the BOC could make a significant difference with the stroke of a pen.

The higher interest rates are lowering inflation.  ?

3 hours ago, eyeball said:

Instead the BOC continues to act as if it believes these factors are the fault of the people most affected by them.

What does fault have to do with it?  

[CdnFox]

1 hour ago, Moonbox said:

Better yet, tell me where I suggested they didn't?

Right where you said that mentioning home and food was 'cherry picking'.  Pretty obvious

 

Quote

People don't qualify for mortgages if housing would be half their income. 

Obviously. They rent.  And then higher interest rates go the fewer people buy and guess what happens to rents. 

Did you not think the two things were connected?

And that doesn't include the people who DID qualify when mortgage rates were 1.7, but now are renewing at 5 or higher.

 

Quote

There are no doubt some extremely unfortunate renters out there not covered by rent control, or some over-leveraged speculators eating shit, but that would be a fraction.  

A very high fraction. THe majority of people will have to move for one reason or another every 5 years or so.  Those people will NOT be covered by rent control. And then there's the renovictions etc etc.

If someone sells the place they're booted as well unless the new owner is renting.

 

That's not how the math works.  The MAJORITY of people are being accounted for in the inflation statistics already.  

Quote

Yes, but the inflation stats are weighted to account for that.  ? 

Nope.  in fact the opposite is true - they exclude many markets from it entirely, such as vancouver and toronto.

No matter how you slice it, rent and food and mortgages are all going up.  And they don't account for things like the fact people don't buy their car they usually lease or borrow for it.  So even if car prices or used car prices go down slightly and 'inflation' goes down as a result, with higher interest rates the actual payments may be higher.

Most people are going to find that their actual realized inflation is higher than the 'official' rate by a fair bit.

 

[Michael Hardner]

8 hours ago, Moonbox said:

There are no doubt some extremely unfortunate renters out there not covered by rent control

I think that you're not seeing what's happening with renters.  At least where I live, it's dire.

The economy is not working for a significant number of people.

[Guest]

12 hours ago, eyeball said:

Higher grocery prices were/are inevitable given the impact of weather/climate factors affecting production.

They are also affected heavily by the cost to transport goods. 

I used to transport freight averaging out 95$ for the freight. 

Now, post covid, I could be paying 400$ or more for the same freight volume.

This has skyrocketed my prices. I can't absorb such a cost.

My freight used to cost me 10, 000$ a year, if that. Usually less. I hovered over the 8, 000 or so mark, as we always looked for ways to be more efficient, to pass savings to the client.

Now, it accounts for well over 30 000$ - 50 000$. This is over the course of a year and a half, if that.

Or in business terms, I used to pay my utilities in freight. Now I could hire an extra high skilled employee for what I pay annually.

The reality is even with green initiatives, the climate change will continue to happen.

You can't sacrifice cost of living for green initiatives, as a result, but am in full agreement that action is necessary.

 

 

Talking to a tenant or business owner, will show that inflation is devastating. 

I increase my rates, but you play a dance of not going too high and losing business, and not going too low and eating into your profit, preventing investment into your growth.

[myata]

31 minutes ago, Perspektiv said:

I used to transport freight averaging out 95$ for the freight. 

Now, post covid, I could be paying 400$ or more for the same freight volume.

I can't claim any expertise just curious have you try to understand where this is coming from? The price of gas was edging on $1 even before Covid, now say 1.60. The salaries did not move. Why such a difference then, what changed? Suppose it's local production not impacted by wars, etc. Either there's a real cause(s) for such a dramatic jump... or the competitiveness in the economy is really low and nobody wants to pick up the slack and compete at a lower margin.

[myata]

I lived in a lower income level European countries and sure they have inflation. But it's of quite different kind. The market does not allow to just raise the prices. And there are many independent producers that try to sell directly to the people bypassing intermediaries. They will sell for what the customer is willing to pay not some story in the news. So the price edges up slowly and carefully, and there are many deals so it's not immediately visible.

I think what we have here is a different kind, monopolistic inflation. It may have begun with some international commodity, like gas. The monopolies happily cried o horror and jacked up prices not forgetting generous safety cushion for the profits. CEO got bonuses for great performance, what no? Joe got the prices for Canadian produced potatoes going from 3.99 - 4.99 to 6.99 - 7.99 pretty much a double in couple of years. Next year, all public services and taxes will follow. The inflation becomes a self-propelling entity.

In this environment one just cannot hold back and absorb the hike for long because everything goes up virtually at once. I wonder are there any independent estimates of the level of monopolization in the economy?

Was his salary indexed like MP's? Guess.

[Guest]

59 minutes ago, myata said:

I can't claim any expertise just curious have you try to understand where this is coming from?

Its a domino effect.

Cost of fuel has almost literally doubled.

Many Canadians during covid went on CERB, and many as a result, forgot how to work upon their return. Many wanted to continue to work from home. In some industries, this is impossible.

This in some trades, has created a labor shortage which compounded a mass exodus of people who retired early. Nursing is no different. Food industry (more specifically, the restaurant and tourism industry). Of course, not all industries are affected as badly.

You can get a very high salary in the worst affected sectors, due to the incredibly high demand on talent.

So, to attract talent, I may say, be able to pay a truck driver 22$ an hour pre-covid (these aren't actual figures).

But now, many are hard pressed to find anyone willing to lift a finger for under 30 to 35$ per hour. You can't not deliver, so you are seeing either wages skyrocket, or bonuses etc.

This is a perfect time to be a nurse, a mechanic, etc. I had no choice but to overpay. Am a lucky few. My staff are all stars. Some pay high, for a revolving door, once a higher pay can be secured if you're not paying high enough. This is insanely costly to a business. I have had business owners almost crying to me, dealing with this, as their service levels go to the drain, making them desperate.

There are of course other factors, but as a business, the cost to transport goods is an immense cost to a business. Both in me receiving or sending goods.

But overall, my costs have jumped about 14% in the last 8 months just in overall raw material costs. Some materials upwards 20+ %

Some factors, have nothing to do with the governments actions during and after covid. You can't blame all on it.

IE some of my raw materials come from Russia. Of course, I wouldn't advertise this, but they sort of are dealing with a volatile situation, but for some products, their pricing is impossible to beat.

To me, this is strictly business. I won't break a business contract with a good partner just because your country is run by a d***.

But their raw materials for obvious reason, are insanely volatile in pricing.

[Moonbox]

10 hours ago, CdnFox said:

Right where you said that mentioning home and food was 'cherry picking'.  Pretty obvious

I said that Canadians don't live under roofs or eat?  

10 hours ago, CdnFox said:

Nope.  in fact the opposite is true - they exclude many markets from it entirely, such as vancouver and toronto.

They do, do they?  ?

10 hours ago, CdnFox said:

And they don't account for things like the fact people don't buy their car they usually lease or borrow for it.  So even if car prices or used car prices go down slightly and 'inflation' goes down as a result, with higher interest rates the actual payments may be higher.

That's the whole point of increasing interest rates.  You dissuade people from borrowing and thus curb demand.  

[Moonbox]

3 hours ago, Michael Hardner said:

I think that you're not seeing what's happening with renters.  At least where I live, it's dire.

The economy is not working for a significant number of people.

Sure, but that's a problem that's being going on for a long time.  This is an inflection point.  We've gone 14 years with near-free borrowing driving asset prices and debt levels up, and very quickly had to flip the script. There are going to be lots of people thrown under the bus, primary amongst them the overleveraged real-estate speculators and the renters who get preyed on.  

[Michael Hardner]

4 minutes ago, Moonbox said:

Sure, but that's a problem that's being going on for a long time.  This is an inflection point.  We've gone 14 years with near-free borrowing driving asset prices and debt levels up, and very quickly had to flip the script. There are going to be lots of people thrown under the bus, primary amongst them the overleveraged real-estate speculators and the renters who get preyed on.  

I would say 'primary' are the ones living in parks and on church lawns.

The fact that it's been slowly getting worse for a long time amounts to a condemnation of national and provincial governments.

[CdnFox]

43 minutes ago, Moonbox said:

I said that Canadians don't live under roofs or eat?  

That's the whole point of increasing interest rates.  You dissuade people from borrowing and thus curb demand.  

Do you need me to go hold your hand and walk you through waht you said step by step like you were a child? 

So - this is basically another case where you realize you were wrong and rather than just cope with it and move on like an adult you deny what you've said and try to twist and turn like a child.

I said food and shelter were higher. You said that was 'cherry picking' certain people. I pointed out that ALL people eat and need shelter. 

You said something stupid, i said something correct. Cope with it - and next time don't be stupid

 

Quote

They do, do they?  

Yeah'.  They do.

Sure- they track increases in all the cities and they track a lot of other goods and commodities as well - BUT WHEN THEY CALCULATE THE INFLATION RATE.....  they use a 'basket of goods' model and exclude a lot of items, use  a 'weighting' model and frequently exclude the figures for 'high volatility markets'.

They also weight the data by province and it's impact, so the province you live in may be very different than the 'official' inflation rate by quite a bit.

Which you'd know if you'd looked it up and found how they calculate the 'basket'.  instead of proving to the world you're a m0ron.  They also don't include real estate price increases which can drastically affect people's living arrangements as well.  The 'basket of goods' is at best a general impression ,it's not meant to be accurate.

 

I don't get you.  Nobody would ever claim you're a genius but you're not the dumbest here by a long shot - but whenever you realize you were wrong about something you implode into this little petulant child  and stop thinking and start acting like a biatch.

You remind me of that old joke - You'd be smart if you weren't so stupid.  

ACTUAL INFLATION FOR MOST CANADIANS WILL BE HIGHER THAN THE "OFFICIAL" INFLATION RATE.  Cope with it.

[Moonbox]

30 minutes ago, CdnFox said:

Yeah'.  They do.

No, they don't, and I literally just showed you that they're included.  

30 minutes ago, CdnFox said:

Sure- they track increases in all the cities and they track a lot of other goods and commodities as well - BUT WHEN THEY CALCULATE THE INFLATION RATE.....  they use a 'basket of goods' model and exclude a lot of items, use  a 'weighting' model and frequently exclude the figures for 'high volatility markets'.

They exclude all sorts of things from inflation calculations, but rent and shelter costs for Canada's largest housing markets ain't one of them, and I'm pretty sure you can't provide any references proving otherwise.  

35 minutes ago, CdnFox said:

They also weight the data by province and it's impact, so the province you live in may be very different than the 'official' inflation rate by quite a bit.

Yes, that's why it's weighted.  It will undoubtedly be worse in Ontario than, say, Manitoba.  It's hilarious that you can acknowledge this reality but then try to tell us that Toronto's excluded from the calculation, as if we'd get any useful provincial data for Ontario without including +25% of it's population.    ?

[Moonbox]

1 hour ago, Michael Hardner said:

I would say 'primary' are the ones living in parks and on church lawns.

The fact that it's been slowly getting worse for a long time amounts to a condemnation of national and provincial governments.

Sure, but it's a condemnation of all levels of government.   We can blame the municipalities and provinces for overly bureaucratizing the zoning and permit process, as well as for short-sighted policy that let the problems fester for a decade and more.  Our last two federal governments lent a hand as well.  

[impartialobserver]

I do not know how it is in Canada but the issue in my neck of the woods is that rental prices are dictated by the willingness/ability to pay of the top 5% of the income bracket. Units will sit empty for months as the landlords patiently wait for the person to come along who is willing/able to pay $2000 per month for a 2 bedroom/1 bath apt. Cut it down to $1300 and your place is full but they have taken the approach seemingly of keeping the price high and catering to only the wealthiest. 

Edited July 19, 2023 by impartialobserver

[myata]

1 hour ago, Perspektiv said:

You can't not deliver, so you are seeing either wages skyrocket, or bonuses etc.

Wages did that, "skyrocketing" in Canada? Do we have any objective evidence of that? If someone worked in delivery for $20 / hour before the pandemic how could they "just stay home" after, like on what income? 52 x 37.5 x 35 ~ 70K a regular delivery person? If it can be believed that a driver's wage next to doubled in a year or two and the rise in the cost of fuel included, it would add a few tens of K annually - to how many million shipped units, on average?  Nope, doesn't line up... maybe in another happy reality?

[myata]

1 minute ago, impartialobserver said:

wait for the person to come along who is willing/able to pay $2000 per month for a 2 bedroom/1 bath apt.

We're hearing that the wages are skyrocketing" here, why should that be a problem?

1 hour ago, Moonbox said:

Sure, but that's a problem that's being going on for a long time.

Rent-controlled means one has to stay in the same place for like ever. Hello, China North?

1 hour ago, Perspektiv said:

To me, this is strictly business. I won't break a business contract with a good partner just because your country is run by a d***.

Like by Hitler, why being shy? You buddy partners pay him tax from their profits and for some of his recruits why are sent to grab, rob, rape and kill according to his "law". But the dough doesn't smell eh? Just don't pretend that you have nothing to do with it. "Business" is not a universal explanation, neither excuse.  

[impartialobserver]

3 minutes ago, myata said:

We're hearing that the wages are skyrocketing" here, why should that be a problem?

Wages have increased but not at the same rate as that of rental prices/home prices. In a state like Nevada where the economy is disproportionately skewed towards restaurants (naics 721) and retail (naics 44 and 45), this rent increase is going to hit harder than it should. These industries are low wage by their very nature. 

[Guest]

1 minute ago, myata said:

Just don't pretend that you have nothing to do with it. 

Because I don't. 

If you knew how many products you use that are sourced in Russia, you wouldn't be giving me a "lesson" in virtue signaling. 

You remind me of a person I knew who mentioned they only buy pickup trucks that say Dodge or RAM on them, because they knew it was made in America.

They are literally made in Mexico. Some of these vehicles are made in Turkey. 

I didn't want to shatter him, so kept it to myself.

Up to you, you would cut all dealings with Russia, and then scoff at the humanitarian crisis you would create, punishing all but the man who started this mess.

I don't go to a person's house telling them how to run it. Especially not if I have s*** that is messed up in my own backyard.

18 minutes ago, myata said:

Wages did that, "skyrocketing" in Canada?

In some industries they have gone up considerably due to shortage/demand. Business 101

 

[myata]

12 minutes ago, Perspektiv said:

Because I don't. 

If you knew how many products you use that are sourced in Russia, you wouldn't be giving me a "lesson" in virtue signaling. 

No, there's no equivalence. I try to avoid the products originating in the dictator countries as much as possible. But you are supporting the dictator consciously and knowingly with part of your money. This is not unlike donating him a cut. No, not the same.

15 minutes ago, Perspektiv said:

I don't go to a person's house telling them how to run it.

To modern Hitler's house, let's be clear. And so, you would go with his rules. Hitler's rules that is, right? No "business" is not a universal band-aid that explains and absolves anything. You are still making a moral choice; and you are fully aware of its implications. The money you give to Russia sponsors and supports modern Hitler's bloody war.