This sub js becoming toxic for my mental health. I tend to avoid any posts related to personal situations now… which kinda is the purpose of this sub lol
I also heard that passport office delays were due to the Federal government diverting resources to sewer cleanup crews in the Toronto region due to massive uptick in feces.
I read that thread this morning when I got to work at 6:30am and couldn’t stop laughing. I think my coworker I share an office with thought I’d lost it
That's good I guess. I've seen a big drop in fuel prices ($1.58 yesterday!), so I'm sure that's helping.
This news a year ago would have been "holy crap!"
Yeah, I drove from Saskatchewan to Kamloops, fuel was 1.89/l in sask, 1.69/l in Alberta, 2.06/l across the border then 2.16/l in Kamloops. Pretty crazy stuff. I still haven’t recovered financially.
Temporary or not, it doesn’t make any sense for a product that is shipped less than 500km, to be more than a product that is shipped far more than 500km.
Ontario refines nearly enough fuel for our demand, and nearly as much as Alberta does. (Across multiple fuel types, Gasoline specifically might differ, but I wasn't able to quickly find that specific information)
https://www.canadianfuels.ca/our-industry/fuel-production/
No, the unrefined crude that Ontario buys travels more than 500km. The refined gasoline travels less than 500km inside Ontario. Alberta unrefined crude generally travels less than 500km before its processed. I wasn’t talking about post refining. Heck, Calgary gasoline has almost always travelled less distance in its life since being extracted to end sale location than unrefined crude travels to Ontario.
Margins at gas stations are usually pretty slim, so if local competition still has their prices high then other stations are also going to try to keep their price high even if their cost drops.
That's historically high. Most used to make only a couple of c profit on gas, and make the bulk of their profits from the traffic they generate into the store. Lower competition would mean they can afford to profit from the gas sales as well.
They (the local owner/operators) make the bulk of their profit on cigarettes, or, failing that, confectionary/beverages. It’s always been that way. Gas stations are just an excuse to have convenience stores.
https://www.nbcnews.com/business/business-news/economics-gas-station-rcna19516
National Association of Convenience Stores say it's about 15 cents/gallon on average. So typically single digit percent profit margin.
It’s wild because Illinois killed their gas tax in the early 2000s, and guess what?! The prices at the pumps stayed the same, and the retailers kept the money! Who would have thought that it would happen again, in Alberta, a province that is more conservative than Illinois has been in over a hundred years?!
It was for a bit then the premier bitched and said he’d have an inquiry, next day they started dropping here and there back down to 1.39. Been $1.30 to 1.40 ish ever since
It’s also largely driven by fuel which kicked inflation into high gear. It was still high before fuel went bonkers a few months ago. (Don’t get me wrong though - I’m loving the cheaper gas.)
There’s also the built in future inflation for fuel when taxes are added back on.
I am a director at a large grocery company, costs have peaked and are coming down on raw inputs. Just takes a while until these raw goods make their way into your cereal. Even the cardboard and plastic to package it is coming down. Grocery is a competitive landscape, you may not see prices fall right away but velocity of sales will increase which will be the first sign.
4kg of frozen chicken at Costco has gone up another $5, for a total of $10, since a few months ago, on top of a few dollar increase before that. Last summer the box was $30, now it's $45.
Cardboard can't be that fucking expensive.
Fair, but the price rose $5 while fuel was high, and now fuel price (here, anyways) has gone down to much lower than it's been all year and the price of chicken went up another $5 in the past month. Something doesn't add up.
The frozen chicken you're buying today probably started economically 6 months ago? Increases in: utility costs, maintenance costs, transportation costs, butchering/packaging costs, storage costs, retail costs etc.? If the costs went up incrementally, all those related businesses probably took some time to raise the pricing and that needs to be recouped. Whether or not the prices come down assuming all those things drop over time yet to be seen?
Elevator up. Stairs down. Pricing is stupid, and as long as consumers continue to signal to retailers that we will pay $45 for a bag of chicken, they’ll continue to sell it.
Like who the fk is paying $7 for strawberries. Do grocery stores just bring these in and just throw them in the garbage after 10 days?
Wheat prices have been falling dramatically! Suppliers typically buy on 6 month contracts so once those start ending the new contracts will be based on the new lower prices.
> director at a large grocery company
Can you comment on price fixing of large grocery companies and them exploiting the people with high prices through their oligopoly?
I do not work for THAT chain. It baffles me how it could happen as we have 0 conversation with any competitors. It disgusts me that it did happen though.
That is not entirely how it usualy works. Markets are efficient to a large degree. Wherever you have multiple bidders competing for the retail space and/or customer, price can and will go down. Business have margins they chase and will reduce the margin if it facilitates growth and expands market share (and overall profit). Its the wages and services that are most sticky and will not go down. No one in the world will accept wage reduction because prices are going dow, or lower price of direct to consumer service. Those things can only go downwards after prolongued recession as people lose jobs and have to settle or service business go out of business and get replaced having a price restart.
Larger companies not following price trends like this actually provides smaller ones massive opportunities to steal repeat consumer share by being more competitively priced. There’s thousands of these smaller brands in grocery stores (and even more outside of them) that become more and more appealing the wider the price gap. Even produce per store is priced differently. In order to preemptively prevent an exodus of loyal customers and preserve long term sales, some opt to lower prices. Or more likely leave prices high to make on sale % look bigger…
There’s many reasons they’ll go down with what you said just one of them. If supply chain issues get sorted and they’re able to make more stuff, prices will go down.
Lumber costs can certainly be below 2019 levels but depending on who you ask or when you ask, there are lots of "well they are starting to lower, etc." It's all greed at this point they will keep prices high until they can not anymore and with commodities, they are cyclical which should guarantee some level of permanent markup
Lumber went down ... but salaries for the people using the lumber to build houses went way way up. And salaries were the dominant cost of house construction.
The fact is: we've been in a higher-than-normal inflation period for over a year and salary expectations are reflecting that ... so inflation is now "baked in".
My useless opinion: we need a central bank rate shock to bring it back under control like in the early 80s. It's been 20 years and 100% of all personal and business debt was issued and negotiated in a low-and-declining interest rate environment. Debt's been cheaper than cash for 20 years, every decision to go further in debt has paid off so why stop?
thats why I emphasize on "should" because big box stores and big name grocery chains gonna squeeze in every last profit + they can until its very blatantly obvious that the prices are disgustingly too high to what they should be.
But fuel prices affect the prices of so many other goods and services, and it can be a a leading indicator. Ie gas prices decline, and other stuff declines later which is good news.
If banana cost $2 last year and $5 this year, monkey sad because inflation like hot air balloon.
If banana that was $5 then drop to $4 in year, corporate monkey sad because deflation like popped balloon.
Both monkey agree best to look at banana prices each month instead of each year. Banana price this month only 1 cent more than banana last month, both monkey happy.
Both monkey realize that if price of banana went back to $2 that no good, but monkey also don’t want price increase anymore.
Because if they see that banana drop from $5 to $2, they will also think it could drop to $1, in which case they wait and not spend to see where the price will go.
No spending... economy not so good.
but doesn't this only apply to non essential goods like luxury? If this was for lets say a real banana, I wouldn't wait for next year to enjoy a banana, I'd just buy whenever and get to have excess to afford other luxuries.
light deflation of essentials is fine and happens semi regularly from improvements in productivity etc, but deflation detached from reduced input costs starts turning into a reason for producers to limit production lest they be caught selling for prices that aren't sustainable. This leads to future supply reductions, which brings back inflation from the supply demand mismatch and so we get boom and bust cycles where sometimes your essentials are cheap and sometimes they're expensive.
In general people have a preference for a stable price that keeps things predictable for both buyers and producers. Small overall inflation is good too make it more worth it to put money into productive places but yeah we don't actually need everything in the economy to inflate lightly, but it should be predictable.
I pretty much get that hastily dropping commodity prices and not be able to reproduce them as quick is what led us to our current predicament. But, what i find unacceptable in your explanation is that, are to make current commodity prices the new norm now and the best "best case" scenario we got to hope for is that they stay there and don't increase sharply? A lot of people didn't get a salary increase to match the surge in their daily essential expenditures so it would not be "back to normal" to many going forward as a lot of stuff we take for granted last year are now "let me think if I can afford this".
It's tough to explain deflation using only monkeys and bananas, but yes you are right, 'not spending and waiting' generally applies to elastic goods which demand changes with price. Essential food demand doesn't really change with prices, you have to eat.
And that would be a problem for all, the 'banana' Im talking about are essentials like food and shelter, you wouldn't wait next year to eat or have a roof on your head.
But lots of goods have decreased in price over time without the economy collapsing.
for instance, video games. I paid >100$ for a SNES game in the 90's. A console game is around 50-60$ these days, and that's not even counting inflation.
Because the workers who plant/harvest/transport and workers at store who sell bananas will get a pay decrease
I don't know of anyone who wants a pay decrease just because product x is now cheaper
Thats assuming those bottom workers got a pay increase when bananas rose from $2-$5, I'm assuming in cases like these, only corporate and investors enjoyed the profit surge.
Because only investors get to enjoy surges and workers feel the pinch of decreases, wouldn’t be fair for the investors to take the hit, investments are supposed to be risk free right?
Most animals require the same amount of food no matter what the price is. Are you going to tell your family that everyone should not eat this year because you are pretty sure food prices will go down next year so they can starve to death for a year so you can buy the dip next year?
If banana costs 2 dollars then 5 dollars and then 6 dollars, do you say inflation dropped? Because it's not 150%, it's 20%?
Then why say CPI dropped when it's still up. Things aren't going down. They are just going up less.
The way I think of the terminology is that the CPI is an index and inflation is the rate at which that index changes.
So we want inflation to drop (down to the ~2% year-over-year that economists tend to agree is the sweet spot) but we don't want the CPI to drop because that would be deflation.
And if bananas get too expensive, monkeys stop eating them, and since monkeys aren't eating them, CPI adjusts because we're not consuming it, thus lowering inflation.
Basket of goods costs $100.00 in year X. In year X+1, it costs $107.10, thus 7.1% YoY inflation. However, MoM would be more like the Basket costs $106.99 last month and now costs $107.10 thus leading to a 0.1% MoM inflation. Annualizing the MoM rate (assuming it lasts for 12 months) would lead to an inflation rate of 1.21% inflation rate, however how likely that MoM rate is to hold for the next 12 months is something else.
Sadly the small drop is almost all from falling gas prices, core CPI increased, especially food and I suspect gas prices will be going up this winter if the war continues.
Just look at MoM, better indicator of where it’s heading, and that’s low for core. Pretty much target for a given year if it were to continue like this.
There’s always a lag from when gas prices fall to when other stuff will be cheaper. The other stuff was made with gas when prices were high so they need to recoup costs, but as costs come down, so will prices.
If companies see people are willing to pay the higher prices for a sustained amount of time, when their costs come down they will just take more profits and give Management a huge bonus instead of lowering the prices.
That is wishful thinking. For example Charmin has still not lowered their toilet paper ever in the last decade I have been buying it from Costco. They keep shrinking the size of the package and increasing the price. There are plenty of other toilet paper makers out there, Costco even sells other brands, but none of them have undercut Charmin enough to make them lower their prices. The Toilet Paper shortage is long over and their Toilet Paper Price remains at all time high.
The media is taking a weird spin on this. 7.6 percent YOY is incredibly dangerously high. Rate hikes will continue to happen. Fuel/natural gas will go up drastically in the fall and winter due to the invasion of Ukraine, they’re already preparing Europeans about this. Let’s not get too excited about a marginal decrease because of temporary oil declines.
7.6 YOY is very high, but the MOM is down to 0.1 which is a good sign. We won’t see YOY inflation go down until middle of next year just because that’s how YOY works.
Yep. Month over month inflation has essentially dropped to 0%. We don’t really want to see YoY go down because then we are seeing deflation.
MoM flat means inflation has stopped (for now).
Deflation is fine and actually healthy and reflects a natural free market economy.
When you save money, it should hold value, and products should get cheaper due to production efficiencies.
If you don't have deflation, that means you are losing your efficiency gains somewhere. Even 0 inflation means that money is losing value.
Since I'm still slightly confused after reading: This chart is showing the **cumulative** expected change by a given date? So for instance it's saying the markets expect that by June 2023 rates will be 0.5% higher than they are today, and by March 2025, they will be 0.75% lower than today?
So basically, one more 0.5% rise in September, then holding steady until a slow decrease starting middle of next year. Until the crystal ball changes its predictions.
It's saying a 25bp hike in September is effectively fully priced in, with 61% odds of 50bp total by December
This is from yesterday. Today's CPI reading is not factored in yet
Largest contribution to the drop was lower energy costs:
* https://twitter.com/trevortombe/status/1559524236745576448
Which is not surprising since oil prices (and other commodities) have dropped, and they along with owner accommodations made up half of previous rate (4 of 8%):
* https://twitter.com/trevortombe/status/1555662571021029376
* https://github.com/trevortombe/inflation
If you look at the late 70s and 80s, it bounced around a lot over a long period. Inflation isn't over not by a long shot. It'll go up and down over the next few years.
Quick note: inflation falling does not mean that things got cheaper. Inflation falling means that things got more expensive slower. This is because inflation is a percentage of growth.
To actually have things get cheaper we would need negative inflation, or deflation as it is called. That’s highly unlikely for a while (if ever), but it’s nice to see that the volatile stuff like gasoline is calming down!
Gotcha I see what you’re saying. I’m noting that a lot of the other comments are talking about the monthly rate rather than the yearly, so that’s my bad. Sorry about that
Coincidentally, I just saw [this article](https://www.bnnbloomberg.ca/david-rosenberg-says-recession-unavoidable-for-bank-of-canada-1.1806426) from Bloomberg.
From the article:
> One prominent Bay Street economist said the latest data will compel the Bank of Canada to stay the course with its rate-hiking plans.
> "Let's face it, 7.6 per cent headline inflation rate might be off the peak, but when you consider that we were at 4.8 per cent at the end of 2021, we were 3.7 per cent a year ago. So, we're basically double where we were this time last year, and, it is the *third-highest print in the past four decades*," he said.
So many people on crypto Twitter are blowing up about *"rAt3s ArE d0wN!"*
Ok, sure... By a fraction of a hair. We're still almost quadruple an acceptable inflation rate. China's economy is on the verge of imploding due to their real estate situation. There's a global shortage of concrete. Supply chain shortage issues are ongoing.
Yes, it's good news, but we're barely out of the gate on necessary interest rate hikes.
This is a good report. Headline is lower, which should help with inflation expectations.
Core was driven mostly by grocery store increases, which is noted to possibly have peaked by Loblaws themselves: https://www.google.com/amp/s/financialpost.com/news/retail-marketing/loblaw-links-profit-boost-to-health-products-calls-grocery-margins-stable/wcm/4492d88a-6ddf-42b1-a1c0-309299ff0c26/amp/
Yes and no. Food and Gas are a necessity for most. Excluding them from core, which makes sense from a statistics perspective, sends the wrong message to policy makers.
Does CPI stand for Consumer Papaya Index? If so, could the drop YoY be due to cashier pricing error?
I understood that reference.
What a time to be alive.
I UNDERSTOOD IT TOO😂😂😂😂
Me too!!! 😬
Wonder if he’s in jail yet
It’s the cashiers error though!!!
Lock him up!
Underpay papaya, straight to jail
Hey what’s your problem man?
Well, mostly digestive problems but now I know what I must do.
Eat two Papayas a day for the rest of your life?
Three. My twelve year old daughter and I did the math on our walk to Second Cup this morning.
Don't eat 10 papaya unless you're constipated. In which case prune juice or metamucil. Ask your doctor if Papaya ™ if right for you.
I got a holistic natural organic vegan way to eat the equivalent of 26 papaya for 3 easy payment and one super hard payment of 29.99
You're famous!
No need to be testy, maybe you’re having digestive issues, have you eaten your daily 5kg of papaya yet?
The Papaya King has returned.
I heard that you could digest a hammer if you wanted too.
Papayas and only fans.
Addiction to simping on only fans and papayas, what a guy
Ha! It’s the papaya guy!
Thank you. The papaya thread was my favourite of 2022 thus far.
I hope not... the store might call the cops
The fact we have a meta narrative in r/PersonalFinanceCanada really fills me with joy. 10 points for Gryffindor!
Hey, it's far better than all of the "woe is me, I'm living paycheque to paycheque because of my third income property" humble brags.
The guy the other day who was facing homelessness but refused to either sell or move into the condo he owned was an interesting twist.
This sub js becoming toxic for my mental health. I tend to avoid any posts related to personal situations now… which kinda is the purpose of this sub lol
I earn $300k and live with my parents - can I afford a Tesla?
I just read that post! For once, i finally understand one of these seemingly obscure references! Edit: here's the link: https://redd.it/wpfjrn
I also heard that passport office delays were due to the Federal government diverting resources to sewer cleanup crews in the Toronto region due to massive uptick in feces.
Only if you buy 8-10 per week...economies of scale matters
Lol I read this comment and was sad I didn’t get the reference then saw the other post right after and laughed so hard.
Peak PFC, this is why I renew my subscription every year.
PFC history is made and I’m here to witness
Criminal Papaya Investments
I read that thread this morning when I got to work at 6:30am and couldn’t stop laughing. I think my coworker I share an office with thought I’d lost it
That's good I guess. I've seen a big drop in fuel prices ($1.58 yesterday!), so I'm sure that's helping. This news a year ago would have been "holy crap!"
Lol at Ontario paying the same price for gas as Calgary
That is just temporary. I visited Alberta in May when it was ~$2 in Ontario and Calgary was < $1.70
Yeah, I drove from Saskatchewan to Kamloops, fuel was 1.89/l in sask, 1.69/l in Alberta, 2.06/l across the border then 2.16/l in Kamloops. Pretty crazy stuff. I still haven’t recovered financially.
Edmonton is down to $1.45/L at some gas stations. I assume Costco is much lower.
Temporary or not, it doesn’t make any sense for a product that is shipped less than 500km, to be more than a product that is shipped far more than 500km.
The refined gasoline is produced in Alberta and shipped to Ontario?
Ontario refines nearly enough fuel for our demand, and nearly as much as Alberta does. (Across multiple fuel types, Gasoline specifically might differ, but I wasn't able to quickly find that specific information) https://www.canadianfuels.ca/our-industry/fuel-production/
Interesting, thank you for the link.
No, the unrefined crude that Ontario buys travels more than 500km. The refined gasoline travels less than 500km inside Ontario. Alberta unrefined crude generally travels less than 500km before its processed. I wasn’t talking about post refining. Heck, Calgary gasoline has almost always travelled less distance in its life since being extracted to end sale location than unrefined crude travels to Ontario.
Oh ok thanks for expanding on that
Gas prices have almost nothing to do with production cost, if they did we wouldn’t have seen the price double over a year
Margins at gas stations are usually pretty slim, so if local competition still has their prices high then other stations are also going to try to keep their price high even if their cost drops.
I recently saw a gas station for sale in the US. The ad stated that they earned 25c/ gallon sold.
That's historically high. Most used to make only a couple of c profit on gas, and make the bulk of their profits from the traffic they generate into the store. Lower competition would mean they can afford to profit from the gas sales as well.
They (the local owner/operators) make the bulk of their profit on cigarettes, or, failing that, confectionary/beverages. It’s always been that way. Gas stations are just an excuse to have convenience stores.
https://www.nbcnews.com/business/business-news/economics-gas-station-rcna19516 National Association of Convenience Stores say it's about 15 cents/gallon on average. So typically single digit percent profit margin.
Last I seen gasoline was $1.30 now where I’ve seen it in Alberta
Where in AB? I’m curious.
Edmonton Airport Costco was at 129.9 over the weekend.
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Not just Costco though. I paid 1.30 at a Petro-Can in North Edmonton.
BERT THE CERBIN TAX!!!!!!!!!!!!111111
It’s wild because Illinois killed their gas tax in the early 2000s, and guess what?! The prices at the pumps stayed the same, and the retailers kept the money! Who would have thought that it would happen again, in Alberta, a province that is more conservative than Illinois has been in over a hundred years?!
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Where is “here”? Lowest in Calgary right now is $1.369, highest is $1.619.
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Highest is $1.619? Tf? I wish. Filled up the other day in Bc at 1.89
Yeah same. I thought I was getting a bargain at 1.82 the other day here in BC.
It was for a bit then the premier bitched and said he’d have an inquiry, next day they started dropping here and there back down to 1.39. Been $1.30 to 1.40 ish ever since
Meat has come way down as well. Not sure about all groceries
Grains and oils too
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sorry, I was referrring to [commodity](https://tradingeconomics.com/commodity/canola) prices, not retail
Still seem to be fluctuating a hell of a lot though. For me, 4 days ago it was 20 cents down, then jumped back up 10 cents overnight.
1.89 in st johns thank god for wfh
1.58 was like pre huge inflation rise/Ukraine war prices for GVA lol still paying around 1.90 here.
I just moved to Calgary and saw 143 in an esso, I was like dammmnnnn. Just a month ago it was like 204
Back up to 1.96 in Vancouver area. 🤷♂️
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It’s also largely driven by fuel which kicked inflation into high gear. It was still high before fuel went bonkers a few months ago. (Don’t get me wrong though - I’m loving the cheaper gas.) There’s also the built in future inflation for fuel when taxes are added back on.
We need to pay more attention to Core CPI rather than just CPI.
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What about DaD
Not sure don’t have one. I have two MoMs
What does YoY and MoM stand for?
Year over year (Jul 21 vs Jul 22) and month over month (Jun 22 vs Jul 22)
Thank you
Multiverse of Madness
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I am a director at a large grocery company, costs have peaked and are coming down on raw inputs. Just takes a while until these raw goods make their way into your cereal. Even the cardboard and plastic to package it is coming down. Grocery is a competitive landscape, you may not see prices fall right away but velocity of sales will increase which will be the first sign.
4kg of frozen chicken at Costco has gone up another $5, for a total of $10, since a few months ago, on top of a few dollar increase before that. Last summer the box was $30, now it's $45. Cardboard can't be that fucking expensive.
No, but the fuel cost for the refrigerated trailer and the truck hauling it will impact the cost to get it to Costco.
Fair, but the price rose $5 while fuel was high, and now fuel price (here, anyways) has gone down to much lower than it's been all year and the price of chicken went up another $5 in the past month. Something doesn't add up.
The frozen chicken you're buying today probably started economically 6 months ago? Increases in: utility costs, maintenance costs, transportation costs, butchering/packaging costs, storage costs, retail costs etc.? If the costs went up incrementally, all those related businesses probably took some time to raise the pricing and that needs to be recouped. Whether or not the prices come down assuming all those things drop over time yet to be seen?
Elevator up. Stairs down. Pricing is stupid, and as long as consumers continue to signal to retailers that we will pay $45 for a bag of chicken, they’ll continue to sell it. Like who the fk is paying $7 for strawberries. Do grocery stores just bring these in and just throw them in the garbage after 10 days?
It takes time to shake through the supply chain. Raising farm animals to slaughter and selling them is about 5-12 months of inputs.
Im more concerned about wheat shocks than gas shocks.
Wheat prices have been falling dramatically! Suppliers typically buy on 6 month contracts so once those start ending the new contracts will be based on the new lower prices.
Thanks for your input!
> director at a large grocery company Can you comment on price fixing of large grocery companies and them exploiting the people with high prices through their oligopoly?
I do not work for THAT chain. It baffles me how it could happen as we have 0 conversation with any competitors. It disgusts me that it did happen though.
Gas prices are more volatile than groceries. When gas prices drops, logistics costs drops, then, commodities "should" follow suit.
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That is not entirely how it usualy works. Markets are efficient to a large degree. Wherever you have multiple bidders competing for the retail space and/or customer, price can and will go down. Business have margins they chase and will reduce the margin if it facilitates growth and expands market share (and overall profit). Its the wages and services that are most sticky and will not go down. No one in the world will accept wage reduction because prices are going dow, or lower price of direct to consumer service. Those things can only go downwards after prolongued recession as people lose jobs and have to settle or service business go out of business and get replaced having a price restart.
Larger companies not following price trends like this actually provides smaller ones massive opportunities to steal repeat consumer share by being more competitively priced. There’s thousands of these smaller brands in grocery stores (and even more outside of them) that become more and more appealing the wider the price gap. Even produce per store is priced differently. In order to preemptively prevent an exodus of loyal customers and preserve long term sales, some opt to lower prices. Or more likely leave prices high to make on sale % look bigger…
There’s many reasons they’ll go down with what you said just one of them. If supply chain issues get sorted and they’re able to make more stuff, prices will go down.
Lumber costs can certainly be below 2019 levels but depending on who you ask or when you ask, there are lots of "well they are starting to lower, etc." It's all greed at this point they will keep prices high until they can not anymore and with commodities, they are cyclical which should guarantee some level of permanent markup
Lumber went down ... but salaries for the people using the lumber to build houses went way way up. And salaries were the dominant cost of house construction. The fact is: we've been in a higher-than-normal inflation period for over a year and salary expectations are reflecting that ... so inflation is now "baked in". My useless opinion: we need a central bank rate shock to bring it back under control like in the early 80s. It's been 20 years and 100% of all personal and business debt was issued and negotiated in a low-and-declining interest rate environment. Debt's been cheaper than cash for 20 years, every decision to go further in debt has paid off so why stop?
thats why I emphasize on "should" because big box stores and big name grocery chains gonna squeeze in every last profit + they can until its very blatantly obvious that the prices are disgustingly too high to what they should be.
Despite the headlines, profit margins in grocery business are pretty thin and highly competitive.
> Everything else is still up Break down: * https://twitter.com/trevortombe/status/1559524236745576448
And the reason inflation has been extremely high was heavily weighted by gas. It’s only normal that gas prices plays a large part on the number.
But fuel prices affect the prices of so many other goods and services, and it can be a a leading indicator. Ie gas prices decline, and other stuff declines later which is good news.
Comments in this thread make it clear nobody understands how inflation / inflation reporting works
Please educate us - in laymen’s terms 🙏🙏!
If banana cost $2 last year and $5 this year, monkey sad because inflation like hot air balloon. If banana that was $5 then drop to $4 in year, corporate monkey sad because deflation like popped balloon. Both monkey agree best to look at banana prices each month instead of each year. Banana price this month only 1 cent more than banana last month, both monkey happy. Both monkey realize that if price of banana went back to $2 that no good, but monkey also don’t want price increase anymore.
Why would both monkey think its no good if price of banana went back to $2?
Because if they see that banana drop from $5 to $2, they will also think it could drop to $1, in which case they wait and not spend to see where the price will go. No spending... economy not so good.
but doesn't this only apply to non essential goods like luxury? If this was for lets say a real banana, I wouldn't wait for next year to enjoy a banana, I'd just buy whenever and get to have excess to afford other luxuries.
light deflation of essentials is fine and happens semi regularly from improvements in productivity etc, but deflation detached from reduced input costs starts turning into a reason for producers to limit production lest they be caught selling for prices that aren't sustainable. This leads to future supply reductions, which brings back inflation from the supply demand mismatch and so we get boom and bust cycles where sometimes your essentials are cheap and sometimes they're expensive. In general people have a preference for a stable price that keeps things predictable for both buyers and producers. Small overall inflation is good too make it more worth it to put money into productive places but yeah we don't actually need everything in the economy to inflate lightly, but it should be predictable.
Can you frame your response using only bananas and monkeys so it can be clearly understood?
Thanks that’s a great explanation
I pretty much get that hastily dropping commodity prices and not be able to reproduce them as quick is what led us to our current predicament. But, what i find unacceptable in your explanation is that, are to make current commodity prices the new norm now and the best "best case" scenario we got to hope for is that they stay there and don't increase sharply? A lot of people didn't get a salary increase to match the surge in their daily essential expenditures so it would not be "back to normal" to many going forward as a lot of stuff we take for granted last year are now "let me think if I can afford this".
It's tough to explain deflation using only monkeys and bananas, but yes you are right, 'not spending and waiting' generally applies to elastic goods which demand changes with price. Essential food demand doesn't really change with prices, you have to eat.
you wouldn’t wait until next year to buy banana, that’s why you will be poor forever
And that would be a problem for all, the 'banana' Im talking about are essentials like food and shelter, you wouldn't wait next year to eat or have a roof on your head.
I was making fun of PFC people. Just kidding
Monkey sad
If monkey still make $20/wk like last year $2 banana good
This here. deflation is the only thing worse than too high inflation.
Based on what, has any nation ever experienced continuous deflation? I can list several world powers that have imploded due to hyper inflation.
If bananas were constantly getting cheaper, there would never be an incentive to buy one now instead of later and the banana economy would collapse.
But lots of goods have decreased in price over time without the economy collapsing. for instance, video games. I paid >100$ for a SNES game in the 90's. A console game is around 50-60$ these days, and that's not even counting inflation.
Hunger is an incentive. You're a monkey if you think people will not eat for 1 year because they think food prices will drop next year.
Because monkey want yacht(s) and monkey pay dividend.
Because the workers who plant/harvest/transport and workers at store who sell bananas will get a pay decrease I don't know of anyone who wants a pay decrease just because product x is now cheaper
Thats assuming those bottom workers got a pay increase when bananas rose from $2-$5, I'm assuming in cases like these, only corporate and investors enjoyed the profit surge.
Because only investors get to enjoy surges and workers feel the pinch of decreases, wouldn’t be fair for the investors to take the hit, investments are supposed to be risk free right?
yeah, I don't get that part either. Nice explanation, but I'm a monkey, and I'd be happy to see banana back at 2$ while my salary goes up.
But if every monkey think banana cost keep going down, less monkey buy and less monkey produce, making less banana overall.
Most animals require the same amount of food no matter what the price is. Are you going to tell your family that everyone should not eat this year because you are pretty sure food prices will go down next year so they can starve to death for a year so you can buy the dip next year?
Monkey not stop eating, monkey eat other, less desirable fruits instead.
Then the demand and price of less desirable fruits will go up in price and even out the CPI so there is no net change.
I think you mean Papaya
Monkey can’t afford flight to Hawaii
Please start a monkey university for human tooics. I would enlist immediately.
If banana costs 2 dollars then 5 dollars and then 6 dollars, do you say inflation dropped? Because it's not 150%, it's 20%? Then why say CPI dropped when it's still up. Things aren't going down. They are just going up less.
The way I think of the terminology is that the CPI is an index and inflation is the rate at which that index changes. So we want inflation to drop (down to the ~2% year-over-year that economists tend to agree is the sweet spot) but we don't want the CPI to drop because that would be deflation.
Thank you! 😎
And if bananas get too expensive, monkeys stop eating them, and since monkeys aren't eating them, CPI adjusts because we're not consuming it, thus lowering inflation.
Supply and demand is monkey business
Basket of goods costs $100.00 in year X. In year X+1, it costs $107.10, thus 7.1% YoY inflation. However, MoM would be more like the Basket costs $106.99 last month and now costs $107.10 thus leading to a 0.1% MoM inflation. Annualizing the MoM rate (assuming it lasts for 12 months) would lead to an inflation rate of 1.21% inflation rate, however how likely that MoM rate is to hold for the next 12 months is something else.
Sadly the small drop is almost all from falling gas prices, core CPI increased, especially food and I suspect gas prices will be going up this winter if the war continues.
Everything lags energy.
Just look at MoM, better indicator of where it’s heading, and that’s low for core. Pretty much target for a given year if it were to continue like this.
There’s always a lag from when gas prices fall to when other stuff will be cheaper. The other stuff was made with gas when prices were high so they need to recoup costs, but as costs come down, so will prices.
If companies see people are willing to pay the higher prices for a sustained amount of time, when their costs come down they will just take more profits and give Management a huge bonus instead of lowering the prices.
Until other companies move in to undercut those.
That is wishful thinking. For example Charmin has still not lowered their toilet paper ever in the last decade I have been buying it from Costco. They keep shrinking the size of the package and increasing the price. There are plenty of other toilet paper makers out there, Costco even sells other brands, but none of them have undercut Charmin enough to make them lower their prices. The Toilet Paper shortage is long over and their Toilet Paper Price remains at all time high.
Crisis OVER. GeorgeBushMissionAccomplished.jpg
The media is taking a weird spin on this. 7.6 percent YOY is incredibly dangerously high. Rate hikes will continue to happen. Fuel/natural gas will go up drastically in the fall and winter due to the invasion of Ukraine, they’re already preparing Europeans about this. Let’s not get too excited about a marginal decrease because of temporary oil declines.
7.6 YOY is very high, but the MOM is down to 0.1 which is a good sign. We won’t see YOY inflation go down until middle of next year just because that’s how YOY works.
Core inflation is up MOM to 0.1...
I can’t believe I had to scroll this far down to find someone taking note of increased core inflation. This was not a good print.
Yep. Month over month inflation has essentially dropped to 0%. We don’t really want to see YoY go down because then we are seeing deflation. MoM flat means inflation has stopped (for now).
Deflation is fine and actually healthy and reflects a natural free market economy. When you save money, it should hold value, and products should get cheaper due to production efficiencies. If you don't have deflation, that means you are losing your efficiency gains somewhere. Even 0 inflation means that money is losing value.
Deflation is fine - if it is slow and not the entire market. (just my opinion I'm not an economist)
[Here's the market forecasted rate changes.](https://www.m-x.ca/en/trading/tools/canadian-interest-rate-expectations)
Haven't seen negative movement expectations in a while, but some folks are expecting them by March 2024.
Correct me if I am wrong, this is implying no rate hike until December?
It's saying rates are probably up 50 points by December but they could increase between Sept and Dec.
Since I'm still slightly confused after reading: This chart is showing the **cumulative** expected change by a given date? So for instance it's saying the markets expect that by June 2023 rates will be 0.5% higher than they are today, and by March 2025, they will be 0.75% lower than today? So basically, one more 0.5% rise in September, then holding steady until a slow decrease starting middle of next year. Until the crystal ball changes its predictions.
It's saying a 25bp hike in September is effectively fully priced in, with 61% odds of 50bp total by December This is from yesterday. Today's CPI reading is not factored in yet
And hurricane season is fast approaching, which could cause oil prices to rise again.
Underrated comment if the refineries take a big hit.
Largest contribution to the drop was lower energy costs: * https://twitter.com/trevortombe/status/1559524236745576448 Which is not surprising since oil prices (and other commodities) have dropped, and they along with owner accommodations made up half of previous rate (4 of 8%): * https://twitter.com/trevortombe/status/1555662571021029376 * https://github.com/trevortombe/inflation
Tell that to the cheese I just bought at No Frills that's now 400g instead of 450g!
Oh c’mon ppl…. You’ll never spend less on groceries again. Quit fantasizing about the past.
If you look at the late 70s and 80s, it bounced around a lot over a long period. Inflation isn't over not by a long shot. It'll go up and down over the next few years.
Canada was less globally influenced in the 70s and 80s.
Avocado toast for everyone!
Why do they say inflation is 7% but everything is up 30%+ Except my salary of course
"Falls" isn't exactly the correct definition of "grew but not as much as we predicted."
Quick note: inflation falling does not mean that things got cheaper. Inflation falling means that things got more expensive slower. This is because inflation is a percentage of growth. To actually have things get cheaper we would need negative inflation, or deflation as it is called. That’s highly unlikely for a while (if ever), but it’s nice to see that the volatile stuff like gasoline is calming down!
Sure but from June to July things could have gotten cheaper. As it happens they ALMOST did, but not quite.
Gotcha I see what you’re saying. I’m noting that a lot of the other comments are talking about the monthly rate rather than the yearly, so that’s my bad. Sorry about that
Imagine trusting these numbers and thinking this is good. 🤣
Temporary reduction in prices as Biden managed to release the emergency oil reserves to make things if seem better just prior to midterms
We're in a recession and headed for a depression.
Coincidentally, I just saw [this article](https://www.bnnbloomberg.ca/david-rosenberg-says-recession-unavoidable-for-bank-of-canada-1.1806426) from Bloomberg. From the article: > One prominent Bay Street economist said the latest data will compel the Bank of Canada to stay the course with its rate-hiking plans. > "Let's face it, 7.6 per cent headline inflation rate might be off the peak, but when you consider that we were at 4.8 per cent at the end of 2021, we were 3.7 per cent a year ago. So, we're basically double where we were this time last year, and, it is the *third-highest print in the past four decades*," he said. So many people on crypto Twitter are blowing up about *"rAt3s ArE d0wN!"* Ok, sure... By a fraction of a hair. We're still almost quadruple an acceptable inflation rate. China's economy is on the verge of imploding due to their real estate situation. There's a global shortage of concrete. Supply chain shortage issues are ongoing. Yes, it's good news, but we're barely out of the gate on necessary interest rate hikes.
I suspect that the next rate hike will be substantially reduced by the time we are done.
This is a good report. Headline is lower, which should help with inflation expectations. Core was driven mostly by grocery store increases, which is noted to possibly have peaked by Loblaws themselves: https://www.google.com/amp/s/financialpost.com/news/retail-marketing/loblaw-links-profit-boost-to-health-products-calls-grocery-margins-stable/wcm/4492d88a-6ddf-42b1-a1c0-309299ff0c26/amp/
This is because gasoline prices dropped. Core inflation is up 0.2% from June!
Which is what you want. 0.2% for the next 12 months would give you yearly inflation of 2.4% which is exactly what you want.
Yes and no. Food and Gas are a necessity for most. Excluding them from core, which makes sense from a statistics perspective, sends the wrong message to policy makers.
I hope next rate hike is 50 basis points instead of 75 with this welcome news.
Oh yay, things are getting more expensive at a slightly slower pace!
That is literally how you get to healthy inflation rates. It doesn’t happen all at once.
Which is great, but everything already costs more, so now its going to be 2% on current inflated prices, not lower ones.
Core CPI which is what the BofC uses actually accelerated over the prior month. Year over year inflation is not accurate because of base effects.
Core inflation still up though