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Impact of inflation

Inflation Can Be Costly

The negative impact that inflation has on your savings over time is an ever-present, but often overlooked risk when investing. As the price of goods and services increases over time, a higher amount of savings is required to maintain the same level of purchasing power in the future.

Consider the impact of inflation on two investors with very different investment approaches

Please enter a value between $0 and $1,000,000.

Today
in 10 years
in 20 years
in 30 years
in 40 years

For illustrative purposes only. The starting amount is the cost of a basket of goods and services that can be purchased today using an equivalent investment amount in current dollar terms. The future potential investment value assumes a 5% rate of return for a balanced approach and a 1.25% rate of return for a cash approach. The projected cost of a basket of goods and services assumes an inflation rate of 2%. The ahead or behind inflation amount is determined by subtracting the projected cost of a basket of goods and services from the future potential investment value. All returns and the inflation rate are compounded annually and do not include transaction costs, fees or taxes. The illustration does not reflect the actual results, future returns or future value of a mutual fund or any other investment.

Balanced approach

Ahead of inflation:

$930

Rate of return:

5%

Inflation rate:

2%

Starting investment amount:

$10,000

Starting cost of a basket of goods and services:

$10,000

Future potential investment value:

$2,530

Projected cost:

$1,600

Cash approach

Behind inflation:

$930

Rate of return:

1.25%

Inflation rate:

2%

Starting investment amount:

$10,000

Starting cost of a basket of goods and services:

$10,000

Future potential investment value:

$2,530

Projected cost:

$1,600

A Balanced Approach

An overly conservative investment approach can hinder growth potential and increase the risk of falling short of your goals. Striking a balance between your long-term goals and your investment approach can help you stay ahead of inflation.

Inflation Investment Primer

Inflation is a measure of the rate at which the price of goods and services in an economy increases over a period of time. Use the Inflation Primer Advisor Resource to review some of the key effects of inflation on individuals, businesses and the economy.

Learn more

Food for Thought

Projected cost of a basket of goods and services

Milk

On average, each Canadian consumes 57 litres of milk and 14 kilograms of cheese in one year.1

Eggs

Canadians consume approximately 11 billion eggs every year.1

Bread

The price of a loaf of bread in Canada has increased by more than 142% since 2000.1

Coffee

Over 2/3 of Canadians drank a coffee beverage each day.2

Transit fare

As urbanization continues, public transit use has risen, with 11.9% of Canadians commuting by transit in May 2025, up from 11.4% in 2024.1

Movie Ticket

62% of Canadians aged 13 and over attended a film screening in 2024.3

1Statistics Canada (2025).

2Coffee Association of Canada (2025).

3Telefilm Canada (2025).

The estimated prices in today’s dollars (as of December 31, 2025) are: two litres of regular milk ($5.38); one dozen regular eggs ($4.70); one 675g loaf of white bread ($3.55); one cup regular coffee ($2.57), an approximation based on the average price of a large (20oz) coffee across five major retailers as of December 31, 2025; one-way local transit fare ($2.60); one regular admission adult movie ticket ($12.57).

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Inflation Can Be Costly

The negative impact that inflation has on your savings over time is an ever- present, but often overlooked risk when investing.

Consider the impact of inflation in 10 years on two investors with very different investment approaches:

Balanced approach

Ahead of inflation:

$1,000

Rate of return: 5%

Inflation rate: 2%

Starting investment amount:

$1,000

Starting cost of a basket of goods and services:

$1,000

Future potential investment value:

$1,000

Projected cost:

$1,000

Cash approach

Behind inflation:

-$1,000

Rate of return: 1.25%

Inflation rate: 2%

Starting investment amount

$1,000

Starting cost of a basket of goods and services:

$1,000

Future potential investment value:

$1,000

Projected cost:

$1,000

Dynamic® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. For illustrative purposes only. The starting amount is the cost of a basket of goods and services that can be purchased today using an equivalent investment amount in current dollar terms. The future potential investment value assumes a 5% rate of return for a balanced approach and a 1.25% rate of return for a cash approach. The projected cost of a basket of goods and services assumes an inflation rate of 2%. The ahead or behind inflation amount is determined by subtracting the projected cost of a basket of goods and services from the future potential investment value. All returns and the inflation rate are compounded annually and do not include transaction costs, fees or taxes. The illustration does not reflect the actual results, future returns or future value of a mutual fund or any other investment. The information provided is not intended to be investment advice. Investors should consult their own professional advisor for specific investment advice tailored to their needs when planning to implement an investment and/or tax strategy to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

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January 1, 1970

Dynamic® is a registered trademark of its owner, used under license, and a division of 1832 Asset Management L.P. This site has been prepared by 1832 Asset Management L .P. and is provided for information purposes only. The information provided is not intended to be investment advice. Investors should consult their own professional advisor for specific investment and/or tax advice tailored to their needs when planning to implement an investment strategy to ensure that individual circumstances are considered properly and action is taken based on the latest available information.

Information contained on this site, including information relating to interest rates, market conditions, tax rules, and other investment factors are subject to change without notice and 1832 Asset Management L .P. is not responsible to update this information. To the extent this site contains information or data obtained from third party sources, it is believed to be accurate and reliable as of the date of publication, but 1832 Asset Management L.P. does not guarantee its accuracy or reliability. Nothing on this site is or should be relied upon as a promise or representation as to the future. Graphs and Charts are used for illustrative purposes only and do not reflect future values or future performance of any investment. Indices are not managed and you cannot invest directly in an index. Diversification does not guarantee a profit or eliminate the risk of loss.

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