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rob carrick

Your personal inflation rate in 2017 could be a problem.

The national rate of inflation has been running in the low 1 per cent rate and in November came in at 1.2 per cent on a year-over-year basis. Inflation is near inconsequential when you measure it using the collection of goods and services assembled by Statistics Canada. But depending on factors like the size of your family, your travel habits and whether you commute, your personal inflation rate could be higher.

Five costs stand out for their potential to rise in the year ahead. To help you manage your household spending, let's work through them.

Buying U.S. dollars

Our dollar is a lot stronger now than it was a year ago, but quite a few analysts and economists see weakness ahead. If you need to exchange loonies for U.S. currency in the months ahead, you should think about doing it sooner rather than later.

The problem for the loonie is that the U.S. Federal Reserve pushed its benchmark lending rate a bit higher in late December as a result of improving economic conditions. The United States looks like a better place to invest right now, and that means pressure on our dollar.

Food

The 2017 food price report from a Dalhousie University team forecasts average increases of 3 to 5 per cent in the cost of food, or up to $420 for the average family. Again, the exact amount of your personal cost increase for food will depend on your personal situation.

The food price report says the biggest price increases – up to 6 per cent – will apply to meat, vegetables and fish and seafood. Stick to dairy, eggs and baked goods and you'll be up against cost hikes topping out at around 2 per cent.

Canadians altered their consumption habits quite a lot in early 2016 after a big decline in the Canadian dollar resulted in higher prices on imported foods, notably vegetables. Stay flexible in your grocery-buying habits to manage your weekly food bill.

Energy

A deal among petroleum producing countries to cut global oil supplies has helped steady the price of oil after an up-and-down year. Oil prices are influenced by a lot of different things – political tensions, global economic strength and output by oil producers, to name a few. While it's hard to predict to prices, there is a case to be made that these factors will combine to produce at least modest price increases ahead. If you drive much, be ready for higher gas prices.

GasBuddy.com shows the average price in Canada in late December was about $1.07 per litre, the highest level since late spring and well above the average of almost 98 cents or so one year ago. A falling Canadian dollar would amplify the impact of rising oil prices (as oil is priced in U.S. dollars).

Nobody's talking much about natural gas prices, but they're higher than they were a year ago as well. Your home heating bill may already reflect this.

Mortgages

There's not much going on in Canada's economy to justify higher borrowing costs, but we are seeing a trickle-up effect from what's happening in the United States. The interest rate on bonds is rising there as investors look ahead to stronger economic growth and higher rates, and we've seen a follow-through in the Canadian bond market. Mortgage rates take their cue from the bond market, and that explains why we saw a small increase in the cost of fixed-rate mortgages in November.

Rates in the bond market have continued to rise since then, and they could rise still further if the economic policies of U.S. president-elect Donald Trump appear to be inflationary. We could see further increases ahead for fixed-rate mortgages, though variable-rate mortgages should remain steady for the next while.

Municipal costs

City governments are very keen to keep property tax bills close to the inflation rate these days, but they're doing it in ways that can result in higher costs for other municipal services. Toronto's proposed highway tolls are one example. Also watch out for higher water and sewer bills and public transit costs.

In Ottawa, where I live, changes to the transit system will result in some people paying $3.35 for a ride in 2017 using an electronic payments system, up from $3 in 2016. That's an increase of 11.7 per cent, well ahead of that national 1.2 per cent inflation rate.