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The inflation rate refers to a general rise in prices measured against a standard level of purchasing power. An inflation calculator can be used to find that a basket of goods that cost $100 dollars in 1984 costs just over $200 dollars today, a 100% increase.
Canadian Price Increases, May 2011
• Energy prices advanced 16.6% during the 12 months to May, following a 17.1% increase in April.
• Gasoline prices rose 29.5%, the largest increase since September 2005. The latest year-over-year increase follows a 26.4% gain in April, and leaves the gasoline index just below the peak level reached in July 2008.
• Prices were also higher for fuel oil (+28.2%) and electricity (+0.9%), while they declined 5.3% for natural gas.
• Prices for groceries rose 4.2% in the 12 months to May, following a 3.7% gain in April. Prices increased for many staples, such as meat, bread and fresh milk.
• Prices for food purchased from restaurants increased 3.2%, following a 2.8% rise in April.
Combined with tough economic times and small or non-existent wage increases, inflation can have a major effect on household budgets. Making lifestyle changes can help mitigate the effects of inflation, and save you money.
Tips For Deflating Inflation
We can take steps to deflate the effects of inflation on our lives. The following are some tips that I have found useful:
Increasing energy prices are here to stay. Draft-proofing your home and possibly adding insulation will help you use less energy. So will keeping your home cooler (or warmer) and adjusting your clothing to maintain comfort. Try to get any passive solar gain you can by opening drapes and letting the sun in during cold weather.
Gasoline prices are reaching near-peak levels, and are unlikely to go down much in the future. We can respond to plus-$100 dollar a barrel oil by making fewer, more efficient trips, and by taking public transportation.
For about the price of one tank of gas a person can purchase a reasonable bicycle.
We can also save energy and money by keeping life local. It is fun to get to know your own neck of the woods.
As groceries get more expensive gardening becomes more attractive. My patio container garden is providing small amounts of fresh, nutritious herbs and vegetables.
Meat is expensive. Rising meat prices can be avoided by increasing alternative proteins in your diet. Look for less expensive protein sources such as beans, quinoa, lentils, nuts and seeds, and tofu. Yum.
Making your own baked products can save a lot of money, and powdered milk is more convenient and less expensive than fresh.
Keep your pantry fully stocked - food in the pantry is better than cash in a bank account paying minuscule amounts of interest. Plus, with a full pantry you will be ready to ride out adverse weather events, disasters, or global economic collapse.
In the 1970's about 10% of the average food budget was spent in restaurants. Today that figure is closer to 50%. The convenience of eating out is costly even without inflating prices.
I never leave home without a bag lunch, picnic, or snack of some sort. I bring water or juice in a reusable container. Once I am out and about there is no need to buy anything. Preparing your own food is less expensive, and can be much healthier. Good food is good medicine.
Making small lifestyle changes, and living more simply, can help reduce the effects of inflation, and allow us to live more efficiently.