Monday, November 7, 2016

Inflation Around the Corner? Know Your Implications.

As much as I try to, I can't seem to get away from the economist (wannabee) in me.

I picked up on the most recent release of US wage rate increases, current to Sept, 2016. See chart below.
You will notice a nice uptick thru 2016. Yes, great news for us all - this means raises on on their way.

However, the other side of the equation presents higher inflation (price increases), because when wages rise - the number #1 cost/expense to most Canadian businesses - comanies offest higher wages with increases prices on all goods and servioces.

The next stage in this process is usually higher interest rates.

So if this wage increase trend continues into Canada for the next little while, well in to 2017, expect to see higher mortgage rates coming at your local bank.

(Sorry for the eco over simplification!)




Saverio Manzo

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