Inflation has averaged 2 per cent (Chart 1), and its variability has fallen by roughly two-thirds. Canadians have benefited in a number of important ways. Greater price stability has allowed consumers and businesses to manage their affairs with greater certainty about the future purchasing power of their incomes and financial assets.
Real and nominal interest rates have also been lower across a range of maturities, in part, because they no longer include a substantial premium to compensate investors for inflation risk. More broadly, low, stable and predictable inflation has facilitated more stable economic growth in Canada and lower and less-variable unemployment (Table 1).