Monday, January 26, 2009

Inflation hits 2 year low

Your Mortgage Matters wants to start your week off with some good news ! Check with your mortgage professional for some great news today on low interest rates.

Just when you need to hear it most - in the middle of a cold snap with economic woes and uncertainty ... you heard it right: Inflation hits a 2 year low.

In fact if not for a spike in the price of some food items the rate would actually be zero! Falling gas and energy prices were countered by rising foodstuffs (fresh vegetables, bakery and cereals all up substanitally) in the December 2008 stats.

Our island neighbours in P.E.I. actually rang up a zero with New Brunswick and Nova Scotia recording decreases of 0.6 and 0.2 per cent respectively. Statistics Canada confirms that the annual rate decreased to 1.2% for the end of 2008 which is a low not experienced since the beginning of 2007.

Month over month November '08 to December '08 prices were 0.7 per cent lower.

Even with these amazing figures, Canada's inflation rate comes in at about 1% above that of the U.S.A. but our weaker dollar and good wage gains by those keeping their jobs makes deflation less of a risk.

The Bank of Canada recently forecast inflation will likely drop below zero in the 2nd quarter once food prices react to the drops in energy and commodity prices. The Bank's "core inflation rate" which excludes energy and many food products due to their volatility remained at 2.4% last month.

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