Greed is the latest unpleasant offspring of soaring prices

Compared to what is happening with the cost of rental cars and hotels, the 8.1% inflation rate in June is a bargain.

The term greed has been used for price increases that seem to go beyond the rate of inflation. If you’ve been planning a trip this summer, you know all about greed. A reader who recently rented a Hyundai Elantra for a day in Victoria was shocked to be charged $155.12 including taxes and excluding the cost of collision damage waiver. He went through his records and discovered that he had paid between $31.20 and $57.30 for one-day rentals from January 2019 to June 2021.

This same individual booked a room at a mid-range hotel in Vancouver earlier this month for a single night and was charged $591.90, all inclusive. He said it was 50% more than what he was paying before the pandemic.

And then there’s the inquiry he made about a room for August at another hotel in Vancouver, this one where he has a corporate rate. An email from the hotel indicated that the corporate rate would not be available, but that a 20% discount on “best available public rates” would be offered. The cost of a deluxe king room: $598.40 per night. This drive is past.

A recent newsletter looked at shrinkage, where companies manage inflation by reducing the size of their packaging without reducing the price. Greed is about how companies handle not only inflation, but also the loss of business during the pandemic. Hotels and car rental companies have been particularly hard hit by the economic lockdowns which have reduced travel to minimal levels.

The dynamics of supply and demand also play a role here. People are moving in the summer of 2022 and they need hotel rooms and rental cars. The prices would not be so high if there was no demand to support them.

There is, however, a myopia in greedy inflationary prices. The economy will slow due to the Bank of Canada’s use of higher interest rates to quell inflation, and speculation of a possible recession is mounting. By next year, people could be spending less on travel and feeling more selective about who they deal with when they need a hotel room or rental car. Companies that are particularly expensive today may not be on the list.


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Rob’s Personal Finance Reading List

Behind the Facebook fa├žade

All about the financial mirages people create on social media about their ability to afford a good life. A good antidote if you’re feeling FOMO – afraid of missing out.

Real estate investing is mainstream

A look at the percentage of people in Ontario, British Columbia and Atlantic Canada who own more than one home. Investor demand has helped create the price spike that rising interest rates are unwinding.

Monarchs, prime ministers and poets

A look at the faces that are on the money in countries around the world.

Better advise seniors

This article for advisors lists ways they can provide better service to this country’s aging population. I include it here to give seniors a context to assess whether they are getting the service they need from their advisors and financial planners.


Ask Rob

Q: Can you please share the best downloadable Excel spreadsheets for retirement planning in Canada please?

A: I did a quick Google search and found only a few US retirement planning spreadsheets available for download. If anyone knows of one that works well, let me know so I can share it with readers – rcarrick@globeandmail.com. In the meantime, here are some online retirement calculators worth checking out.

Do you have a question for me? Send me. Sorry I can’t answer each one personally. Questions and answers are edited for length and clarity.


Today’s financial tool

Cryptocurrency basics from a trusted source, the Ontario Securities Commission.


The cashless zone

Time’s list of the world’s greatest places to visit includes Toronto and Tofino, British Columbia.


look at this

A TickTok video in which a career counselor fends off employers who say ‘no one wants to work anymore’. Right on.


what i wrote about
  • Why GIC Rates Didn’t Rise After the Big Jump in the Bank of Canada’s Overnight Rate, and Why Yields May Actually Fall
  • Lessons on Inflation and Rates from 21.25% Mortgages and 19.5% Canada Savings Bonds of 1981
  • The housing market trend no one is talking about is improving affordability for young buyers

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