There have been so many headlines about rising inflation as 2021 winds down. Inflation isn’t always a bad thing – in Canada, our banks and government usually aim for an inflation rate of 1- 2%. However, Canadians watching prices increase due to inflation are concerned because for the last several months our inflation has been more than double that, most recently sitting at 4.7%.
Who’s feeling the most pain as a result of inflation? It depends on what you spend money on.
Not everything is getting more expensive or seeing such a dramatic price change.
How inflation affects your personal finance
Vehicles and gas costs are a big driver of the overall 4.7% increase, according to the latest Consumer Price Index from Statistics Canada [Link to statistics]. Gas prices are up more than 30% compared to the same time last year, partly because we’re still comparing to the unusually low prices that happened in the early stages of the pandemic. As time goes on, and we begin comparing current numbers to the “return to normal-ish” prices of later 2020, that price increase percentage will get less extreme.
The price of new and used vehicles (if you can find one to buy) has gone up by more than 7%. Unless you absolutely need a car now, it’s best to hold off at least another few months to see if there are more vehicles for sale and prices have come down a little.
At home, anything to do with home renovation or home improvement continues to be more expensive than usual with prices up more than 14%.
There are a few areas that have seen prices decreases in the last year. If you’re a frequent driver, it’s not enough to offset the increase in gas prices, but you can make smart choices to ease up the budget pressure a little.
Many of the Canadian telecom companies have rolled out cheaper offers this year. Do a little comparison shopping to see if there’s a better cell phone plan for your needs. Car insurance rates have come down too – no one loves comparing insurance rates but it can have a lasting positive impact on your monthly bills when you lock in a better rate. At the grocery store, while meat continues to get more expensive, fresh vegetables have become a bit cheaper.
As the economy continues to change in unexpected ways, one thing remains the same: the more you plan ahead for financial decisions, the better off you’ll be.
Do you need help with your personal finance? Do you need help improving your credit score or rebuilding after a consumer proposal? Contact us today and schedule a free credit consultation. Our credit counselling service is completely free and will NOT affect your credit score.