What changed in 1991
The Bank of Canada and the federal government adopted an explicit inflation-control framework in 1991. The framework focuses on the rate of price change, not a fixed dollar price for the basket.
A long-run comparison should use actual CPI outcomes, not simply compound exactly 2% for every year.
A 2% target is not a ceiling on every price
Some categories rise faster, some more slowly and some fall. The target concerns an aggregate measure over time.
Temporary shocks can also move inflation away from the midpoint, so an assumed flat 2% path is not historical data.
| Claim | Correct reading |
|---|---|
| Every price rises 2% | False; CPI is an aggregate |
| The price level returns to 1991 | False; the target is a rate |
| Actual CPI equals 2% yearly | False; outcomes vary |
Price stability versus a fixed value of $100
Even stable positive inflation compounds, so C$100 gradually buys less of the same broad basket. Price stability means predictable low inflation, not an unchanged price level.
Use CPI for the cumulative result and the Bank’s framework material for policy meaning; keep those two claims distinct.