Have we hit peak inflation? That was the question on the minds of consumers and economists alike this week, as Canada’s inflation rate reached 8.1 per cent in June, a 39-year high. Surging gasoline prices were the main factor fuelling the jump, Statistics Canada said. On the bright side, June’s inflation reading was lower than most economists had expected. With signs of supply chains and gas prices easing, some began ruminating this week on whether price pressures will soon abate. BMO chief economist Doug Porter said that while declining prices at the pumps might mean the headline inflation figure drops next month, consistent pressures elsewhere mean it could take a while before core inflation relents. RSM Canada’s Tu Nguyen, meanwhile, said uncertainty on the global stage might mean we’re waiting until the end of summer to know if inflation has peaked. In fact, global pressures affecting food and fuel prices were behind Canada’s biggest inflation crisis in recent history, back in the 1970s and 80s. Back then, inflation hit a high of 12.9 per cent and interest rates had to balloon to 21.5 per cent to get prices back under control. Global News broke down the lessons from the past and why today’s economic fate might be different.  Chickpea supplies in peril But just as some global supply chain pains show signs of improving, the next snarl could hit your favourite dip. Global production of chickpeas, the pea protein base for hummus and a variety of soups and stews, is forecast to be down roughly 20 per cent this year, according to data from the Global Pulse Confederation (GPC), a non-profit that represents various players in the agricultural sector. A lot of that is due to the war in Ukraine. Russia and Ukraine typically combine for 30 per cent of the world’s chickpea exports. But slowdowns in production cycles elsewhere in the world, including a drought hitting farmers in the United States, could compound these supply chain issues for the popular pea. The result? Prices for hummus and other chickpea products could soon be on the rise in Canadian grocery stores. "Manufacturers will likely increase prices and retail prices will be affected, but then again, it doesn't necessarily mean that demand will follow suit. Typically, consumers don't react well to higher prices – they'll just walk away and buy something else," said Sylvain Charlebois, a professor in food distribution and food policy at Dalhousie University. Read more from Global News’ Aaron D’Andrea.  Did short supply really fuel the COVID-19 housing price surge? The role of Canada’s housing supply gap in fuelling the home price surge during the COVID-19 pandemic is being called into question by the Bank of Montreal’s top economist. Doug Porter spoke to Global News this week about his analysis of some southern Ontario markets over the first two years of the pandemic, when home values surged nearly 90 per cent. In the past few months, however, those same cities have seen marked declines in prices of as much as 20 per cent. In his estimation, a lack of supply — which has not changed drastically this year — is not to blame. Investment demand and speculation are more likely the culprits, he argued, as rising Bank of Canada interest rates have swiftly removed that from the equation. "I think we should move away from this view that we're not building enough to house everyone,” he said. “We may not be building enough to meet all the investment demand out there, but I think that investment demand is about to crumble as a result of the run-up in interest rates that we've seen in the past six months.” Read more from Global News reporter Craig Lord. ________________________ – THE QUESTION – “If I buy an annuity with taxable RRIF funds ($100,000.00), would government rules also oblige me to withdraw the yearly amount? Are there options to convert my RRIF in retirement that gives me a bit more flexibility on how much I want to withdraw and when?“ — A Money123 reader “It sounds like you would like to withdraw less than the required RRIF, so that your investments can grow longer. We see this situation with clients when they are in a higher tax bracket already and the minimum RRIF withdrawals will all be taxed in a higher bracket. An annuity may or may not achieve that. You are required to convert your RRSP to a RRIF at age 71. At that time, the minimum withdrawal is 5.28 per cent of the Jan. 1 balance. If you have an annuity that meets all the criteria, you can take the annuity payments instead of the required minimum RRIF withdrawals. Depending on a few factors, the annuity amount could be higher or lower. The annuity must either be a life annuity that does not guarantee payment past age 90 or a term annuity that pays you until age 90. If you buy the annuity at age 71 just before you convert your RRIF, the annuity payments are likely to be higher than the minimum RRIF for the first few years. But if you bought the annuity quite a bit earlier, say age 60, then they would probably be less. To get a lower withdrawal from an annuity, you would probably have to start before age 71, which may defeat your intent of deferring your tax as long as possible. There are some options other than an annuity that give you more flexibility: 1. Younger spouse: If you have a younger spouse (or can find one!), then you can base the RRIF withdrawals on your spouse's age, which would mean lower required withdrawals. 2. Reinvest: You can withdraw the minimum, but immediately reinvest the extra amount you don't need in a TFSA or non-registered investment. You are still taxed on it, but it stays invested. 3. RRIF meltdown strategy: Use your home equity to borrow to invest and use some or all of the RRIF withdrawals to make the interest payments. The interest payments offset the RRIF withdrawals for tax purposes. Your investments are now in a non-registered account, which is taxed at preferred rates for capital gains and dividends – and there are no required withdrawals. You can withdraw as little as you want. With effective investments, you should have a more comfortable retirement, as well. 4. Planning years earlier: You can plan years before age 71 to put yourself in a better position. You may have some years of low income or a big tax deduction of some kind when you can withdraw larger amounts from your RRSP in a lower tax bracket. This would leave less in your RRSP when you convert to a RRIF.“ -Ed Rempel, fee-for-service financial planner and tax accountant, blogger at Unconventional Wisdom. ___________________________ Want your money question answered by an expert? Get in touch! | 
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