Are they lying to us about the "real" inflation rate?
Rob Snow, CFRA's afternoon drive host, routinely snickers on the air each time Canada's inflation rate numbers are released by the Canadian government.
He usually wonders aloud about how it can be that the inflation rate magically hovers around 2% - the latest release in November is 2.5% - while commodity prices continually creep or skyrocket upwards with no end in sight. Gasoline prices are 17.6 percent higher than they were in November 2006, and they went up 4% in the past month alone! Coffee is getting more expensive (Tim Hortons hiked their prices this past summer) and fruits and vegetables regularly spike. Statistics Canada pointed out in its November release that mortgage "interest cost index" has increased by 7% and restaurant meals are close to three percent more expensive than they were one year ago. Let's not even mention the increased hydro rates and property taxes!
Apparently, one "justification" for inflation rates remaining "stable" in recent years (according to the government, that is) is the fact that car purchase costs have decreased by 3.9% year to year. Costs associated with buying a computer have fallen through the floor in recent years, 14.9% in the last year alone! Sure, but how many times a year does an average Canadian buy a car and a computer? Compare that to the frequency of gasoline, citrus fruit and coffee purchases made by families from coast to coast and you can see how ridiculous this comparison scale really is.
It's all a scam, Rob Snow has speculated, and I think that a key indicator to show that he's right on track is a CNNmoney.com report today. Statistics Canada says that fruit and vegetable prices are down by 6.2 to 11 percent as compared to the previous month. CNN states that food prices have gone up 4.7% since January 2007 (led by an increase in fruit, vegetable and milk prices), "outpacing the 4.3% overall cost of living increase", led by a 23.2% increase in the price of milk alone. If their fruits and veggies are "leading the upward charge", how come our prices are down so much for the same products? It doesn't make sense!
Can both governments be telling the truth? Might Rob Snow be right? Are we being "snowed" by the great economic leaders of our country?
If milk, vegetables, cereal, beef and poultry are on the rise just a few hours south of here, how can it be that vegetables have decreased by 11% and fruits went down by 6.2% here in the great white north? Are we buying cheap fruits and veggies from Cuba (which would obviously be illegal in the States) or have we started growing our own oranges, bananas and carrots somewhere in the snow up here? Where's the discrepancy coming from?
It just doesn't add up. Who suffers? The first people who come to mind are our seniors who have seen their Canada Pension Plan benefits go up by about two percent (if they're lucky), based on what seems to be fudged CPI numbers. Many seniors are on fixed incomes. The Government of Canada bases their "raise" in pension rates on CPI numbers.
It's a shame, really, for anybody who signs personal cheques, keys their PIN numbers into debit machines or forks out cold, hard cash for goods and services knows that living in an average Canadian village, town or city costs more than ever. I'd love for someone from the Bank of Canada or Statistics Canada to justify their numbers - when property taxes alone are going up by 5% or more in cities from coast to coast, it's a farce to expect us to believe that things (overall) are only about 2% more expensive this year as compared to last.
All that when an economy far larger, yet pretty much identical to ours just a few hours away is up by at least double that amount? What's going on!?
posted by Michael Mason @ 10:48 AM
4 comments
4 Comments:
Short answer: no, I don't think so.
Rob Snow has a habit of simply parroting what people - already in the know - have known for a long time. Like most broadcasters, he simply reports the news, or simply parrots the undercurrent less mainstream news that eventually arrives on the mainstream's doorstep - case in point: Rob Snow. So I don't think too much credit need be issued his, or any other mainstream media's way.
In answer to the question: I don't think they are LYING per se. Anyone with Economics 101 can simply see that the powers that be simply DO NOT include those things that CLEARLY would impact the consumer's wallet. If they'd change the RULES then they could more accurately represent what we're actually spending. But even the definition of inflation has been completely highjacked, but that is another subject all together!
And three times is the charm - one also has to consider with respect to increasing or decreasing prices north or south of the border - the purchasing power of one's currency. The US is a net importer of oil whereas Canada is not. Oil, etc. is an input cost of production. Even if the world price of oil is set on the NYMEX, as Canadians might have noticed during the previous months, when oil was hitting $100 per barrel, the price at the pump was not rising as high in the consumer pocket because the value of our currency was hitting high digits. People forget quickly what the prices were in previous months. Think Summertime when Canuck buck was worth less but price of oil was high and transferred through to the consumer - and we hadn't even hit $100 per barrel.
Now another thing, if Canada and the USA are both importing food, who has had the higher purchasing power? Manufacturing sector's woes aside, Canada's purchasing power was much greater. Furthermore, our currency was rising higher than other major world currencies as well. This affects the cost of imported goods. Next time you go into Loblaws just check out all the food produce being imported from China and Mexico. Higher Cdn. dollar + Cheap imports = Lower Prices. However this was not the case with the auto sector. Although, as of Feb 2008 prices are finally starting to be peeled back.
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