Financial Glossary
Inflation
Inflation is the rate at which the general level of prices for goods and services rises over time, eroding purchasing power. It is typically measured by the Consumer Price Index (CPI), which tracks the cost of a basket of common goods and services. Central banks target moderate inflation (typically 2%) as a sign of a healthy economy.
Example
If the inflation rate is 3% per year, an item that costs $100 today will cost approximately $103 in one year. Over 10 years at 3% inflation, that same item would cost about $134. This means your savings need to grow at least at the inflation rate to maintain purchasing power.
Frequently Asked Questions
How does inflation affect my salary?
If your salary increases by less than the inflation rate, your real income (purchasing power) is decreasing. When negotiating raises or evaluating job offers, consider whether the increase keeps pace with or exceeds inflation.
How do I protect my savings from inflation?
Investing in assets that historically outpace inflation (stocks, real estate, TIPS) can protect your purchasing power. Keeping large amounts in low-interest savings accounts means your money loses value over time. Use our investment calculator to model growth against inflation.
Related Resources
Official Sources
Canada calculators use data from the following official government agencies:
- Canada Revenue Agency (CRA) — Federal and provincial income tax rates, CPP contributions, and RRSP limits.
- Statistics Canada — Employment data, income statistics, and housing market data.
- Bank of Canada — Interest rates, inflation data, and mortgage rate benchmarks.
Methodology
Our Canadian calculators use federal and provincial tax brackets, CPP/QPP contribution rates, and EI premiums published by the Canada Revenue Agency (CRA). Economic data is sourced from Statistics Canada. Mortgage calculations use Bank of Canada rates and market averages. All figures are for educational purposes.
Data Sources
All tax brackets, contribution rates, and economic data used in our calculators are sourced from the official government publications listed above. Rates are updated at least annually to reflect the latest tax year and regulatory changes. Users should verify critical figures with official sources or qualified professionals.
Last updated: June 2026. Information may change; always verify with official sources.
Last Updated: June 2026 — Reviewed Against Official Sources