How has inflation impacted Canada?

Statistics Canada reported Wednesday that an uptick in the price of gasoline was a major factor causing the overall inflation rate to hit 7.7 per cent. Gas prices rose by 12 per cent in the month of May alone, and are up by 48 per cent compared to where they were a year ago. How has inflation and the high cost of living impacted you?

What is a rate of inflation?

The rate of inflation refers to the percentage increase in the price level and is usually expressed at an annual rate; if the CPI rose from 100 to 132 over two years, then the price level rose by 32 per cent; that is, the rate of inflation was about 16 per cent annually.

What was the rate of inflation in Canada in 1981?

In 1981 Canadian inflation reached an annual rate of 12.5 per cent; by 1986 this figure stood at 4.1 per cent and by 1994 it had fallen to 1.7 per cent. In the US, the average annual CPI rose only 1.1 per cent in 1986, the lowest gain in 25 years. By 1994 the rate of inflation in the US stood at 3 per cent.

How does the bank of Canada maintain its target inflation rate?

The Bank of Canada has two tools at its disposal to maintain its target inflation rate. During an economic downturn, the bank can buy government bonds and other financial assets to drive up the price of these assets and thereby lower the interest rate bondholders receive. This tool is called quantitative easing.