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CPP Investments | Investissements RPC
What is inflation? Why do you need to know this definition? The MoneySense Glossary is your resource for learning and understanding financial terms.
Inflation is the rising cost of goods and services, a.k.a. the cost of living. Over time, inflation erodes the purchasing power of money—for example, items that cost $100 two decades ago will now run you $144.61. In Canada, the most widely used measure of inflation is the Consumer Price Index (CPI), a fixed basket of hundreds of different goods and services, including food, shelter, clothing, transportation, health care and recreation. Each month, Statistics Canada checks the prices of these goods and services to see how much they have changed.
Example: “When planning for retirement, consider how inflation can affect your savings.”
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