Rising food prices helped push up the national inflation rate by 0.7 per cent in October. But for my wife and I, prices rose 1.7 per cent over the same month last year.
This discrepancy will resonate with a lot of people. The national inflation rate is designed to reflect changes in prices for a basket of goods and services experienced by the average household. But personal experience can differ widely, depending on your spending habits.
Statistics Canada has created a Personal Inflation Calculator to help people track their own inflation rate and compare it to the official number. I gave it a try this week, right after the official inflation rate for October was announced.
The calculator’s month-by-month data shows our household inflation rate was consistently lower than the national rate until the pandemic hit. My theory about why we’re now experiencing higher price increases is that we’re spending more on food, which has been a big contributor to inflation lately.
In October, for example, the national inflation rate was driven to a large extent by higher food costs. Fresh vegetables were 9.5 per cent more expensive in October compared to a year earlier, while meat prices rose 1.7 per cent. Fresh or frozen chicken was up 2.4 per cent.
Now is an ideal time to give the Personal Inflation Calculator a try. Running the numbers will help you better understand the stresses on your personal or household spending in the year to come. There’s also a financial-planning angle here – with a personalized inflation rate, you can better estimate the investment returns you’ll need to meet your financial goals.
Subscribe to Carrick on Money
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
Rob’s personal finance reading list
Best no-fee credit cards
I’m including this list for people who don’t earn enough rewards typically to offset the $150 or so annual fee on many reward cards and for people who want a no-fee backup for another reward card they use most of the time.
What happens when your online purchase never arrives?
CBC looks at what protections are available when an online purchase is lost en route to you or is delivered to the wrong person.
What your baby stroller says about you
A look at UPPAbaby strollers, which have turned into a status symbol. “UPPAbabys aren’t mere products; they’re lifestyle signifiers.”
For those worrying about tax increases
Government spending to fight the pandemic has a lot of people worried that tax increases will be needed at some point to get deficits under control. Stephen Poloz, the former Bank of Canada governor, said in a recent speech that spurring growth would be more productive for governments than increasing taxes. Frances Donald, global chief economist and global head of macroeconomic strategy at Manulife Investment Management, says low interest rates take the pressure off governments to raise taxes.
Ask Rob
Q: Would it be possible to see a comparison of interest rates on TSFAs?
A: A bit of background to start. You can base a tax-free savings account on a wide variety of saving and investing vehicles – mutual funds at your bank, stocks or exchange-traded funds at an online broker or ETFs via a robo-adviser. Another option for a TFSA is a high-interest account at an alternative bank. Here’s a listing of alternative banks and the rates they offer on TFSA and regular savings accounts.
Do you have a question for me? Send it my way. Sorry I can’t answer every one personally. Questions and answers are edited for length and clarity.
Today’s financial tool
The Osgoode Investor Protection Clinic has produced a series of videos explaining the risks of investing, how to report wrongdoing by an investment adviser and how to go about pursuing a complaint.
The money-free zone
I just finished a book that will absolutely be on my list of best reads of 2020 – A Burning by Megha Majumdar. A look at how the lives of three people are affected by a young woman’s comments on Facebook about a terrorist attack on a train. Grim, but such a tight, powerful book.
ICYMI
Here are some Globe and Mail personal finance-related stories
- My PTSD and shame around money are intricately linked. It’s time financial-literacy programs recognized that
- Winter tires could save your life – don’t listen to the truthers
- Cash them or stash them? How to manage your reward points in a pandemic
More Rob Carrick and money coverage
Subscribe to Stress Test on Apple podcasts or Spotify. For more money stories, follow me on Instagram and Twitter, and join the discussion on my Facebook page. Millennial readers, join our Gen Y Money Facebook group.
Even more coverage from Rob Carrick:
- 🎧 Catch up on Stress Test: How to survive the gig economy • How to get out of debt • Is now the right time to buy a house? • Crisis-proof your finances • Does investing change during a pandemic? • Can you afford to live downtown? • The cost of kids • Should you move back in with your parents?
- ✔️ A 10-point pandemic personal finance checklist: Create a "wartime" family budget; stop worrying about bank deposits; clean out your big-bank savings account; get relief on car payments; get preapproved for a mortgage; WFH? Save $1,000 a month; save, save, save; build resilience by not anxiety-buying; consider the cost of mortgage deferrals; get ready for the second wave of financial distress.
- 📈 Investing: The case for a tight portfolio of big blue chips dividend stocks; robo-advisers beat human advisors (and they’re thriving), why online banks that are better than the branch; is it time to invest your 2020 TFSA; don’t get your mortgage at a bank; why it’s so hard to invest in preferred shares; stock up on stocks to retire early; and are you following the 10-year rule with your investments?
- 💰 Saving: Food waste is wasted money; why you might regret that SUV and find out if CAA is worth it; juice your PC Optimum points; how an ex-Bay Street lawyer got out of debt; blindly easy tweak to your retirement investments to survive economic downturn; should you buy that latte?
Are you reading this newsletter on the web or did someone forward the e-mail version to you? If so, you can sign up for Carrick on Money here.
