Inflation is one of the most prominent topics across the globe as all nations try to recover from the effects of the recent COVID-19 pandemic. Canada felt some of the worst of the pandemic’s impacts, making this topic especially interesting for all stakeholders in the country. This proposal is driven by the research question: what are the inflation dynamics in the Canadian context? The paper will present three articles exploring these issues, presenting their publication information, summary, and contribution to understanding the research question.
Sharon Kozicki, Jill Vardy, and Laurence Savoie-Chabot’s article “Price check: Inflation in Canada” on the Bank of Canada’s website discusses Canadian inflation. The blog piece was published in February 2019 and addresses this issue and its relevance to the nation. The article explains this concept and talks about its history, purpose and use, factors influencing it, what it means to the economy in its various states, and the ideal rate. The authors define inflation as the rate at which products and services rise in a given economy (Government of Canada, 2022). They present how inflation tells of the overall health of the Canadian economy and how each person experiences it differently using the example of a smoker with a car and a non-smoker cyclist.
According to the report, the economy only functions well when inflation is stable and predictable and is in an unhealthy state otherwise. inflation has been stable in the country over the last 25 years because of an agreement between the Bank of Canada and the Government of Canada. The commentary concludes with an explanation of how the bank achieves the desired inflation; by adjusting its key policy interest rate.
Kozicki, Vardy, and Savole-Chabot’s article characterizes inflation, including presenting various data about its workings in the Canadian context, which is one of the ways it contributes to answering the research question (2019). The authors also touch on the history, function, and purpose of inflation in the country’s economy, thus providing in-depth answers to the topic. Finally, the article serves as a good introduction that gives the researcher a foundation upon which they can build the rest of the research.
Statistics Canada’s “Rising prices are affecting the ability to meet day-to-day expenses for most Canadians,” released on June 09, 2022, on the authority’s website, and The Daily discusses the impact of inflation on Canadians. The article talks about how the current rate of 6.8% is way higher than the desired rate of 2% and presents the ramifications on citizens (Government of Canada, 2022). The authority presents various findings from a survey conducted over two weeks from April May 19 to May 1, 2022. The results show that around 40% of Canadians felt the effects of rising food prices, 32% those of higher transportation costs, and 9% of shelter and expenses related to housing (Kozicki et al., 2019). Further, there are disparities between demographics; for example, younger Canadians are experiencing the brunt of the increase in housing-related prices, and people in urban cities that related to food.
Canadians have resorted to various adaptation mechanisms to cope with the rise, with most altering their lifestyle and spending habits to fit the new situation. Overall, higher prices have had a very detrimental impact on Canadian society that keeps worsening every day. This source helps contribute to a deeper understanding of the research question by providing concrete examples of how inflation has manifested in Canada. The authors present findings from a survey conducted over a substantial period and featuring an adequate number of participants, and, therefore, credible and actionable. The article also gives insight into the impact of inflation and its relation to economic health by presenting real-world scenarios as they have occurred in the nation. Finally, the presented content gives the reader an idea of what unfolds when there is significant fluctuation in inflation.
Angelo Melino’s article “Inflation Targeting: A Canadian Perspective,” published in 2018 in the International Journal of Central Banking, discusses inflation targeting from a Canadian point of view. The journal article touches on the monetary policy framework, providing an overview of its history, application, and evolution amid changing demands from various stakeholders. Inflation targeting was introduced as a response to high inflation levels in the early 1990s, with the government and the Bank of Canada committing to reducing the rate to a 2% target by 1995 (Melino, 2018). Received with skepticism at first because of the lack of empirical evidence and academic research, the nation soon embraced the concept once it demonstrated its ability to keep the rise in prices in check. The framework held its own and helped the nation navigate turbulent and tranquil times, quickly becoming the gold standard in ensuring stable, reliable inflation.
However, the 2007 financial crisis called to question the proper use of inflation targeting, prompting several changes to the Bank of Canada’s approach. The author argues that a lot would change in the country due to the recession’s implications, but the inflation-targeting methodology will remain largely the same because of the soundness of the principle behind it. Finally, this framework will remain superior to alternatives like price-level-path targeting for the foreseeable future as it is the best way to ensure the appropriate rate of increases in the price level in the country.
This source helps the researcher and reader understand the topic and research question by providing a comprehensive discussion and analysis of inflation in the Canadian context. The author goes into detail about the dynamics of the rate of increase in prices, comparing current methodologies that can be used to ensure a constant rate and analyzing each and its feasibility. Melino also looks toward the future and talks about the different scenarios that might unfold with the evolution of monetary policy in Canada, showing why the policy is likely to remain unchanged for a while. This source offers an immense amount of knowledge needed to adequately characterize inflation in Canada, including its manifestation, background, present, and future, facilitating a clear understanding of the phenomenon.
Inflation is a crucial part of any economy, especially now that the world is recuperating from the massive disruptions and losses caused by the COVID-19 pandemic. Canada is also on the path to recovery and is currently faced with a rate three times the 25-year average (Government of Canada, 2022). All stakeholders must become aware of the current situation to have a chance to make things better. Combined, the articles in the discussion above offer a succinct explanation of this phenomenon in the Canadian context, leading to a better understanding of what is happening.