Canada’s inflation rate decelerated to 3.4 per cent in the year up to May, Statistics Canada said Tuesday, led by sharply lower gasoline prices. But beneath the headline slowdown in consumer prices, many facets of the cost of living are still increasing at an eye-watering pace. Grocery prices went up at an almost nine per cent pace.
Pretty much. Interest rates are a blunt tool. I’m worried we’re drifting into stagflation.
Taking your example of housing, raising interest rates just makes it more expensive to own homes and to build homes. People have to live somewhere, and there isn’t really any surplus housing. This makes it harder to downsize to reduce housing costs.
So much of what’s driving inflation is outside of our control, but not necessarily beyond our influence.