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Inflation Is Already Here—For the Stuff You Actually Want to Buy


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If it feels like the price of everything you buy has been soaring, that’s because it has—even as central bankers everywhere worry about the danger of deflation.


The gap between everyday experience and the yearly inflation rate of 1.3% in August is massive. The price of the stuff we’re buying is rising much faster, while the stuff we’re no longer buying has been falling, but still counts for the figures.


Economists will be relieved that the laws of supply and demand are still working, at a time when so much in the discipline is in doubt. But for investors it hangs a veil over the outlook for perhaps the single most important issue for the markets: whether we’re headed for a future of inflation, deflation or a continuation of the past decade’s lackluster price rises.


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Wherever they can, every business has been passing on the lockdown costs of Covid. PPE, plus the additional per unit cost of fixed overhead distributed over fewer units sold. For most, the % increase has been substantial, but not noticeable by the average consumer. If you primarily eat out, vendors/subsidies have been eating much of the cost. If you primarily eat in, you are eating the cost.

  • Within Canada, covid delayed the arrival of agricultural migrant workers, resulting in less plantings. PPE measures, and covid outbreaks added significant costs. Much higher costs/smaller volumes = higher/unit costs = inflation. Every time you choose to eat something fresh.

If you are primarily importing food, and food is a material portion of the nations aggregate purchases, devaluation can absorb some of the inflation. If the food is primarily home grown .... welcome to inflation.



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