Recently, Canada has seen a sustained increase in the cost of goods and services, and according to the Canadian Federation of Independent Business (CFIB), we can expect a worsening inflation picture in the near future. Here’s what you need to know…
What is inflation?
Inflation refers to a general rise in the price level of an economy. It represents how much more expensive a relevant set of goods and/or services has become over a certain period, most commonly a year.
How is inflation affecting Canadian Business?
Inflation hit Canada in the spring and was thought to be temporary. Although now, many analysts aren’t so confident that it will end anytime soon. In fact, according to an August survey conducted by members of the Canadian Federation of Independent Business, businesses expect they will raise their prices by an average of 3.8 per cent over the next year. This marks the highest inflation rate record going back to 2009 and it more than doubles the historical average.
What effect does this have on the economy?
When prices go up, the dollar doesn’t go as far as it used to. This loss of purchasing power negatively impacts everybody’s standard of living. High inflation rates cause consumers, businesses, and investors to be uncertain about what their costs will be from one day to the next. It is this unpredictability that keeps the economy from performing at its best.
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