Sat. May 28th, 2022

As inflation accelerates at the fastest level in 30 years, people may wonder how they can best protect their personal finances.

According to new data released by Statistics Canada on Wednesday, inflation was 4.8 percent last month in Canada, up from 4.7 percent in November. That pace has not been seen since September 1991.

In Ontario, inflation was even higher at 5.2 per cent.

CTV News Toronto asked financial commentator Patricia Lovett-Reid what it means for people and how they can prepare for what lies ahead.

Lovett-Reid said the most immediate effect is likely to be an increase in interest rates.

“It would be hard to find an economist on Bay Street who does not think the bank will not move at least 25 basis points next week,” she said.

“We are paying more for pretty much everything. So for the first time in a long time, we want the bank to raise interest rates to curb inflation.”

Grocery store

She said a rise in interest rates would lower people’s ability to spend money and in turn keep inflation in check.

“It reduces the purchasing power of people who have floating-rate mortgages that are tied to bank interest rates because they have to put more money into their mortgages,” Lovett-Reid said. “They have less to go out and spend.”

So what should you do?

Lovett-Reid suggests that people “do their homework” and explore the possibilities with their mortgages.

She said it could be beneficial to “start thinking about switching to fixed-rate mortgages.”

While Lovett-Reid said it will not be the solution for everyone, it is not important at least to ask questions.

“I think you’re proactive at this point,” she said. “You do not want to be complacent.”


Lovett-Reid said in times of high inflation, it is important to understand where all your money is being spent and cut back on unnecessary goods.

She said people should make sure they know where every dollar they earn is being spent and constantly make sure they “get the best value for money.”

She said a good example of inflation right now is streaming services. This week, Netflix announced that it would raise its prices for users.

“It’s small amounts, but incremental amounts add up to a lot over the course of the year,” she said.


Lovett-Reid said that while the headlines about inflation may seem scary to people, it is important to understand your own financial situation.

“I think the fact is that you need to understand where your household is and what your basket of goods actually costs,” she said. “For example, we saw inflation tick higher for cars, but you may not be in the market for a car.”

She said people need to understand their needs “in terms of panicking from a headline number.”

Overall, Lovett-Reid said there is not a single thing that will help save consumers money during this period of high inflation.

“It’s going to be a series of doing a lot of little things,” she said. “It’s not about the big win.”


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