Chapter 5
Article: http://www.cbc.ca/news/business/story/2011/03/04/f-canadian-food-prices.html
Summary:
This article is about the general price increase within supermarkets. George Weston Ltd., has announced that prices in their products will increase by 5 percent in April 1. This price increase is directly in relation to the inflation of wheat, oil and sugar. In fact, prices are expected to increase by five to seven percent within the next year. This inflation isn't exclusive to Canada though, it is an inflation on the global scale. However, Canadians will have much less to worry about because our dollar is still strong. Lower-income families will ,however, have the biggest impact of all as five to seven percent will be a big chunk of their budget.
Connection:
Price increases in our supermarkets is a cost-push inflation. This is because of the occurring price increases of wheat, sugar, and oil. Its going to cost companies much more money to produce their food products and ship it out, so naturally they're going to have to increase prices in order to make a reasonable profit. The cost of oil is likely to be a result of the Libya crisis, which impacts the everyone around the world and should result in much more cost-push inflation. The food industry won't be the only to suffer from these price increases, so will many other industries. Oil is indeed a valuable asset that affects everything.
Reflection:
Inflation is a good economic indicator, but its not the best. This is because inflation is mostly based on predictions and guesses. It might discourage people from buying goods fearing that it'll increase in price in the future. The inaccuracies of these predictions may actually cause more inflation because people won't be investing in those goods, which will cause chain-reactions to other markets. Prices in oil will affect the food market, you need something to fuel the trucks that are shipping these around, right? Anyways, inflation is better seen as an economic hardship. The worst the increase the harder times will be.
