As we mentioned in our previous article, “inflation is the persistent rise in the average level of prices over time.”
A gradual rise is expected, but what we’re experiencing today is a rapid rise that’s put pressure on businesses to raise their prices. And Canadians are feeling it.
When supply goes down, prices go up.
So, how did we get here? The pandemic and other factors have contributed to economic disruptions like supply chain issues around the world, resulting in a limited supply of goods and services. That’s increased the demand for those goods and services, driving prices up.
The Bank of Canada (BOC) aims to keep inflation at around 2% year over year. But in February, we reached a 30-year inflation high with significant price increases for real estate, food and gas. And it keeps rising, with a rate currently sitting at 6.7% year over year.
To combat inflation, the BOC raised interest rates in March 2022 to help cool spending and slow down the economy. The problem? We’re still dealing with supply chain issues. This, along with the ongoing pandemic, could put us at risk of stagflation, which is when the economy becomes stagnant during a period of inflation.
Since you can’t control the economy on your own, there are ways you can lessen the impact of inflation on our wallet. For example, you can build a budget to better prepare for price increases, or you can try incorporating these money-saving hacks.