Toronto Star reported last week that Canadians can expect to pay more at the grocery store this summer on meats and vegetables, thanks to a falling dollar which has driven imports and other costs up. According to a TD Economics report, beer prices are expected to go up as well, along with other items. While plunging gasoline prices are said to be helping to keep the annual inflation rate down currently, it's only a matter of time before things get worse. As Canada continues to operate with its fiat currency system, it is only going to breed a weaker economy and higher prices in the long-run. Most consumer products imported into Canada are priced in U.S. dollars and this means that the cost will only increase as the Loonie continues to weaken against the U.S. dollar.
In Canada, meat was up roughly 12.4 per cent last month, and vegetables increased roughly 8.4 per cent compared to rates from a year earlier. The Loonie continues to drop and prices are only expected to get worse. In one TD Economics report, Canadian Consumer Prices Riding on Loonie's Wings, it was predicted that consumer prices might rise by at least 0.8 per cent this year alone. The Loonie has been falling for the past two years and overall has fallen roughly 30 per cent. Retails sales have also been weak throughout the first quarter of the year.
Some analysts are even predicting that the Loonie could drop as low as 60 cents against the U.S. dollar. Currently, the Loonie is sitting at around the mid-70 cent U.S. level. Meat and vegetables aren't the only things on the rise either. Furniture prices are up roughly 3.3 per cent compared to January, and this makes it one of the largest monthly increases according to BMO economists. Travel services are also shown to be up roughly 12.1 per cent. Clothing and footwear prices are rising too, following about eight years of price declines. Toothpaste and toilet paper are two items that fluctuate in a highly sensitive manner to changes in the dollar, it is expected that their cost could rise by roughly 6 per cent this year.
A weak Loonie may boost some exports, but it hurts those who live and shop in this country. Those who use savings accounts are being punished by the weak dollar and the continually low interest rates in the country. The interest paid on their accounts can barely (if at all) keep up with the annual rate of inflation. As long as the nation continues to allow the Bank of Canada to maintain an unjust monopoly on the production of the currency, the cost of living will continue to increase for Canadian citizens. Unfortunately, hundreds of fiat systems have failed before throughout history, and the Canadian fiat system will be no different. If we were truly interested in real economic prosperity, then the solution would be to allow currency competition within the market, because good money is going to drive out bad money.
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