Inflation may be low for now, but here's why it would be wise to keep a closer eye on it

The Bank of Canada’s assurance that inflation isn’t an issue will be tested with each visit to the grocery store

, when recency bias will cause us to forget how little we’re paying for those goods and services we purchase less frequently.

Expectations of inflation — false or otherwise — could turn into inflationary pressure if individuals start to insist on pay raises or if companies begin demanding higher prices as a hedge against the possibility of future input price increases. If those forces become entrenched, the central bank could be forced to raise interest rates ahead of schedule.

There are many more pressing concerns, but responsible decision-makers will be keeping inflation in the back of their minds.

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