TORONTO -- After holding off on an interest rate increase last month, the stage is set for the Bank of Canada to hike in March after the annual inflation rate topped five per cent for the first time in more than 30 years, with prices rising for everything from groceries and gasoline to rental costs and home prices.
Don't expect it to affect prices right away, however. Trevor Tombe, assistant professor with the department of economics at the University of Calgary, says that it will likely be 18 to 24 months before the economy starts feeling the impact of the central bank's rate hikes.
"For the economy as a whole, it takes time for the Bank of Canada changes to affect things," he says.
In the meantime, Canadians might be hearing a number of similar words being thrown around as inflation continues to rise. What do they all mean?
The -flations you should know:
Inflation
When the price of common goods like milk, meat and gas go up and the purchasing power of the consumer is reduced -- money does not go as far as it normally would.
Stagflation
This occurs when high inflation drags on in combination with slow economic growth and high unemployment.
Deflation
When the average prices of goods and services goes down. While a small drop can result in a consumer-spending boost, broader deflation can have the opposite effect and lead to an economic downturn.
Disinflation
This is when inflation rates fall. The term refers to the rate of change in the rate of inflation. "Think of it like this: disinflation is to inflation as deceleration is to speed," says Tombe.
Reflation
Monetary policy aimed at restoring deflated prices and curbing an economic downturn.
Hyperinflation
When prices rise at a very high rate in a very short period of time.
Shelflation
This occurs when food products are delayed reaching store shelves, giving perishable food a shorter shelf life. The consumer pays the same price, but the product is likely to go bad faster.
Shrinkflation
When the size and quality of a product is reduced but it costs the same or more, such as introducing a smaller bottle with no price change.
This report by The Canadian Press was first published Feb. 16, 2022
Correction:
Backstory:
