Inflation Rising in Canada and the USA

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It looks like inflation rising in Canada and the USA is starting to appear. Royce Mendes, senior economist at CIBC noted that headline inflation data rose at its fastest pace since in a year.However, he added that it still shouldn’t have much impact on interest rate expectations. US inflation came in a touch hotter than expected, but it shouldn’t do much to move markets today, he said.

Up here in Canada inflation is starting to show also. Although tame at the moment prices are on the rise. Next year in 2020 food prices are expected to jump costing families more money to feed the family. Although the Liberals are cutting taxes the cuts won’t be near enough or in time to do much good. House prices are also expected to rise next year along with energy. All these indicators are not looking well for the consumer as wages are not rising accordingly at the moment. When wages do start to take off look out below, the inflation Genie will be released from the bottle.

Inflation Rising in Canada and the USA

According to different agencies, US CPI inflation will be within the range from 2 to 2.4 percent in 2019 and average at around 2.5 percent in 2020. We all know that these numbers from the US inflation numbers are a bunch of huey dough. Let’s face it anyone who has to buy a home or feed his six kids knows the real inflation truth. Everyone always seeking shelter hopes for a major crash in housing or a super job with fantastic wages to pay for it. Jobs of this caliber are not easy to come across and not everyone has the brains to work in Silicon Valley.

I cannot see any other way out of this mess because of the high debt everyone including government holds. People and Companies along with Government are stressed with debt. Cheap borrowing has caused it and the debt bubble is about to pop. The only thing that can save it is either more interest rate cuts to prop up asset prices. Higher wages to offset the cost of debt. Bigger profits for companies and lower cost for Governments. We all know these events are not happening. Ask any worker about his wages and only a small percentage will tell you he’s happy with their pay.

Inflation Rising in Canada and the USA

There is only going to be one way to keep this economy afloat. Keep rates low or even lower to blow air into the giant debt bubble. Nobody wants deflation. Deflation is a nasty word for everyone. This would cost the servicing of debt impossible for many. Also it would mean less profits for business causing them to lay off workers. With unemployment at record highs Governments don’t want any layoffs. This would mean less tax revenues for one thing along with less business activity.

It looks like the only answer to get out of this mess of debt is inflation. How high or how fast it will accelerate is anybody’s guess. One thing for certain it is on it’s way. House prices might flatten out but don’t expect a crash. The powers that be will stop this from happening. We could be in for a long and drawn out boring flat line economy that just hums along going neither up or down. This might well be the outcome. In the meantime Silver could be a good hedge against the coming storms.

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