Inflation, rising interest rates, debt: The cost of living could rise more slowly, but a reversal is not really possible, according to an economist.
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“What happens on the other side of the planet has an impact on our campaigns,” said Simon Brière, financial markets analyst at RJ O’Brien, speaking to Philippe Vincent Foisy on Friday.
While wheat prices doubled after Russia’s invasion of Ukraine, they “didn’t quite return to normal,” falling by half, according to the economist. The good harvests in Canada, Australia and Russia were a blessing for the wheat price.
When it comes to the prices in the grocery store, there is “a kind of habituation,” the expert noted.
For him, inflation and the cost of living will not go down and go back to what we had before.
“We’re getting into a situation where we have a lot of inflation,” he said. But we’re aiming for 2%, that’s a way of saying there is life.”
Prices may rise less quickly, but there will be no turning back.
Property
“Today access to property is very difficult,” he admitted. According to him, we “magazine payments,” meaning a potential buyer estimates how much they can pay per month to stay within a budget.
“By raising interest rates, we’re reducing borrowing capacity by about 40,” he said.
The economist also says he is very concerned about the debt. “We have enormous debt here in Canada,” explained Mr. Brière, adding that for every $100 of income we owe about $180.
He puts it into perspective by saying that borrowing on a real estate asset on a mortgage is better than borrowing on a credit card for quick spending.
Also, the debt in Canada is held heavily by Canadians and not foreign players.
“Debt makes the economic environment extremely vulnerable to rising interest rates,” he said.