Transparency on Inflation
0 have signed. Let’s get to 500!
"More Transparency on Inflation"
Inflation is the phenomenon when the prices of goods increase, yet the purchasing value of money diminishes. Inflation is a very important marker because it dictates the interest rate set by the Bank of Canada. But how does it affect you and me?
Youth are losing money
The interest rate is the most important metric for helping people grow their money—particularly young people. If inflation is actually higher than it really is (which I believe is true), than the money you have in the bank is losing value every day.
Youth are the most affected by inflation, so please pay attention and read on. Because we all need each other to make a change here.
If inflation is high, the interest rate is increased to slow down the circulation and volume of money. If inflation is low, the interest rate is decreased. Over the past ten years, we’ve seen the lowest inflation rate in Canada since the Great Depression—despite having unprecedented economic growth, an affordable housing crisis, and elevated consumer prices.
How has this happened?
The reason is simple: the way our government calculates inflation is cryptic; and the aspects that are known are both antiquated and inaccurate.
Inflation is calculated using the Consumer Price Index (CPI). The government uses a set of “household goods” and examines the price change of these goods over time. The inflation is the growth of the price of these goods. These are things like:
- Health and personal care
- Real estate
However, there is very little transparency on (1) the exact goods within these purchase categories, (2) the proportion (or weighting) of these goods on the calculation overall, and (3) geographical adjustments for urban areas versus rural.
1. The price of tea is used in the ‘food’ category; but it’s not clear if the price of organic, ethically sourced, and non-standard flavours (e.g. ginger, green, rooibos) are factored into this category. It’s likely they are not. The same issue occurs with alcohol. Craft beers are now extremely popular, but have they been integrated into the calculation? Or does the category simply include ‘Coors Light’?
2. Real estate prices, including rent, have maintained double-digit growth across the country over the past decade. Many young people devote 50 percent (or more) of their income to real estate; but does the inflation calculations take this into account? Or is it too focused on older generations who own homes? There should be a proportionate spread based on the spending amounts for different generations—particularly the younger generation who need representable interest rates to save and grow money.
Over the course of the last five years, prices in urban areas, such as Toronto and Vancouver, have grown to unaffordable levels. There are more than 6m people living in the Greater Toronto Area, which is ~17% of the Canadian population. However, does the Toronto CPI basket of goods have a 17% weight on the overall inflation calculation? It’s not clear it does.
How can you help?
Sign this petition to show the government Canadians, particularly young Canadians, that we deserve to know more about how inflation is calculated. We want full transparency on the inflation formula and the data behind it. This should coincide with our government’s Open Data action plan. In addition, signing this petition will help the government know they need to modernize the set of goods that encompasses the CPI basket, to take into account significant changes in consumer tastes and product availabilities in the recent decade.
Complete your signature
0 have signed. Let’s get to 500!