In an earlier post, Marc Lee mentioned in passing the German hyperinflation episode of the 1920s. It’s remarkable that this event still holds such sway over the popular imagination despite other more recent instances of hyperinflation. Certainly, the imagery is powerful: German citizens pushing wheelbarrows full of worthless paper money around for everyday purchases, banknotes used as wallpaper, or dramatic […]
Read moreThe December 2010 issue of the quarterly Economic Climate for Bargaining publication that I produce is now on CUPE’s website in both English and French. In each issue I summarize developments and trends for the economy, labour markets, inflation and wages, and also include short pieces of 1-2 pages on related topical issues. In this issue, the focus is very much on pre-budget […]
Read moreHere’s a new take on bringing economic theory to the masses — a rap battle between Keynes and Hayek. What’s amazing about it is the amount of solid (if not plain nerdy) content this video packs into such a short time. It’s fun to watch for sure (very high production values), but you get that much more out of it […]
Read moreToday’s Consumer Price Index release told a tale of two inflations. The national rate decreased from 1.8% to 1.7% while Ontario’s inflation rate remained at 2.9%, the highest in Canada. Monetary Policy Of course, monetary policy should reflect the whole country. The national inflation rate decreasing to 1.7% in August begs the question of why the Bank of Canada has […]
Read moreThis morning, Statistics Canada reported that the implementation of Harmonized Sales Tax in Ontario and British Columbia helped drive the national inflation rate from 1.0% in June to 1.8% in July. By comparison, the Bank of Canada’s core inflation rate (which excludes tax changes and volatile items) edged down from 1.7% to 1.6%. However, annual inflation rates are not the […]
Read moreBetween May and June, consumer prices decreased in both absolute and seasonally-adjusted terms. As a result, the annual inflation rate fell to 1.0%, about half what it had been at the start of this year. One province, Manitoba, actually slipped into deflation. The Bank of Canada’s core rate edged down to 1.7%. Monetary Policy Inflation’s continuing decline begs the question […]
Read moreEarlier this month, the Bank of Canada raised interest rates ahead of its original schedule to head off inflation. Some commentators are calling for further rate hikes in the near future. But today’s Consumer Price Index suggests that inflation is not an impending threat. Adjusting for seasonal factors, consumer prices were lower in May than they had been in April. […]
Read moreThis morning, Statistics Canada reported that the annual inflation rate rose to 1.8% in April. Inflation and Wages While inflation remains low, it is eating up almost all of the modest wage increases that workers have eked out over the past year. The Labour Force Survey indicates that the average hourly wage rose by 2.0% between April 2009 and April […]
Read moreMark Carney saw a bogeyman on Tuesday morning. He was spooked into removing his conditional commitment to hold interest rates, which would otherwise have expired at the end of June. By signalling that it might raise interest rates ahead of schedule, the central bank drove the Canadian dollar from 98 US cents on Monday to 100 US cents on Tuesday. […]
Read moreThe main question about this morning’s Consumer Price Index is whether it will propel the Canadian dollar to parity with the American dollar. Higher inflation would increase the chances of our central bank raising interest rates sooner rather than later. Higher interest rates would make the loonie a more attractive holding for international financiers. In fact, today’s figures show the […]
Read moreWages had seemed to be one of the relative bright spots during the economic crisis. Despite the carnage in Canada’s job market, average hourly earnings held up fairly well. However, comparing today’s Consumer Price Index release for January with the Labour Force Survey for that month reveals that inflation exceeded fractional wage gains over the past year. Specifically, the annual […]
Read moreThe obvious headline from today’s Statistics Canada release is inflation rising to 1.3% in December, its highest level in almost a year. However, the Consumer Price Index actually decreased between November and December. The overall price level was down 0.3% in absolute terms and 0.1% on a seasonally-adjusted basis. The annual inflation rate rose only due to a lower base […]
Read moreThe national inflation rate jumped to 1.0% in November from 0.1% in October. As Statistics Canada notes, this apparently large increase is “due primarily to gasoline prices.” Specifically, last month’s gasoline prices are being compared to the depressed gasoline prices of November 2008. Given the changed base of comparison, it is not surprising that the headline inflation rate has returned […]
Read moreCanada’s extended summer of deflation ended in October, when the national inflation rate rose to 0.1%. This change reflects a lowered base of comparison: the price of gasoline plummeted between September and October of last year. The return of inflation should not be overstated. Today’s inflation rate is barely positive and falls short of the 0.3% that analysts had been […]
Read moreWhile some prices rose slightly and others fell slightly between July, August and September, the total Consumer Price Index has remained exactly the same through these months. The annual inflation rate declined by 0.9% in September, tying July for the largest rate decline since 1953. All provinces but Saskatchewan now have negative inflation. While the main story continues to be […]
Read moreThis morning’s consumer price figures for August are reminiscent of July. The annual Consumer Price Index decline was 0.8% (compared to 0.9% last month.) With the exception of July, August was the sharpest drop in consumer prices since 1953. In both July and August, eight of ten provinces posted negative inflation rates. The only province with positive inflation in both […]
Read moreIn July, the Consumer Price Index posted an annual decline of 0.9%, the most negative inflation rate since July of 1953. This decline is troubling not only because it is larger than last month’s decline, but also because it is more widespread. Recent decreases in inflation have mainly been driven by lower gasoline prices in 2009 compared to 2008. This […]
Read moreDeflation is no longer a spectre, but a reality for Canada. This morning, Statistics Canada reported an inflation rate of minus 0.3%. Inflation turning negative was widely predicted, including in my previous comments on the Consumer Price Index. Although not surprising, today’s news has important implications for the debate about further fiscal stimulus. Statistics Canada noted that June 2009 was […]
Read moreThis morning’s Consumer Price Index data reveals that the national inflation rate fell to 0.1% in May. Four provinces – Alberta, New Brunswick, Nova Scotia, and Prince Edward Island – posted negative inflation rates. The supposed risk of continuing fiscal and monetary stimulus too long is that they could propel accelerating inflation. The Finance Minister and Bank of Canada Governor have […]
Read moreToday’s Consumer Price Index provides an important reminder that, despite expansive monetary policy from central banks and perceived “green shoots†in the economy, deflation remains a more serious risk than rising inflation. In April, the national inflation rate fell to 0.4%. Four provinces – Alberta, Nova Scotia, New Brunswick and Prince Edward Island – posted negative inflation rates. While falling […]
Read moreA lot of people I meet these days ask about the risk of a future surge in inflation, or even a return to “hyperinflation,” as a result of government’s efforts around the world to stimulate spending and demand — in part through large deficits, and in part through very loose and unorthodox monetary policy (including, in some jurisdictions, “quantitative easing”). […]
Read moreThe Consumer Price Index decline in March confirms that deflation remains a greater risk than rising inflation. The annual inflation rate fell to 1.2% nationally and turned negative in one province, Prince Edward Island. The recent revelation of the first annual decline in American consumer prices in half a century underscores concerns about deflation. While falling prices benefit consumers with […]
Read moreThe increase in consumer prices between January and February suggests that the threat of deflation may be less imminent than it appeared during the previous five months of falling prices. Whereas three provinces actually posted negative inflation rates in January, all posted positive inflation rates in February. Today’s Bloomberg report begins by noting that this data “may ease pressure on […]
Read moreConsumer prices fell by 0.1% between December 2008 and January 2009, reducing the annual inflation rate to 1.1%. Prince Edward Island joined the other two maritime provinces in having the dubious distinction of a negative inflation rate. This decline mainly reflected falling gasoline prices. Lower fuel costs were partly offset by higher mortgage-interest costs due to higher real-estate prices than […]
Read moreI’ve just read an excellent paper “From Financial Crisis to Depression and Deflation” by Hansjorg Herr of the Berlin School of Economics, circulated by the Global Union Research Network (but not yet posted to their web site.) Herr argues that demand deflation is inevitable in a downturn like the one we are in, but this becomes really dangerous for the […]
Read moreToday’s Consumer Price Index suggests that Canada is lunging toward deflation. The annual inflation rate plummeted to just 1.2% in December, 2.2% lower than only three months ago. If this pace continues, the national inflation rate will turn negative in the next few months. Two provinces, Nova Scotia and New Brunswick, already recorded negative inflation rates in December. Of course, […]
Read moreIn November, prices fell for a second consecutive month and annual inflation fell for a third consecutive month. The Consumer Price Index declined from 3.5% in August to 3.4% in September, 2.6% in October, and 2.0% in November. A few more months of decline could turn this annual rate negative. While steadily falling prices would be a boon to individual […]
Read moreSeasonally-adjusted consumer prices fell by 0.5% between September and October. While less dramatic than the 1.0% drop in the US, the sudden drop in Canadian prices also raises the possibility of deflation. The annual inflation rate declined from 3.4% in September to 2.6% in October, well below the US rate of 3.7% in October. This pace could put Canada on […]
Read moreIt strikes me that progressive economists should talk less about the need for immediate fiscal stimulus, and more about the case for an extended period of public investment led growth. Of course, as we slide into recession, Canadian governments will likely shift from surpluses to deficits simply by not cutting spending as much as revenues fall in line with shrinking […]
Read moreMarc recently noted the Bank of Canada’s announcement that it was cutting interest rates to increase future inflation up to the 2% target. In the comments section, Stephen argued that there is nothing noteworthy about the Bank trying to achieve this target. Everyone else contended that the Bank’s new line deviates significantly from its previously hawkish position on inflation. It […]
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