Inflation is about purchasing power.
Statistics Canada's Consumer Price Index compares the cost of a fixed basket of goods and services through time. It is a broad measure. A household's own mix of housing, food, transportation, health and recreation can move differently from the index.
The Bank of Canada expresses its inflation target using the year-over-year change in total CPI. A planning assumption is not a forecast of next month's or next year's inflation; it is a visible convention for comparing amounts over a long period.
One comparison rule
Keep every amount on the same dollar basis.
Future amounts are expressed in today's purchasing power, making them easier to compare with current spending.
Amounts include the assumed rise in prices, so the dollar figures become larger over time.
Mixing one future-dollar amount with one today's-dollar amount can distort the gap.
A simplified example
The same basket can be shown two ways.
A fictional basket costs $100 today. In an illustration using a stated inflation assumption, its future-dollar price rises each year. In a today's-dollar view, the same basket remains $100 because the assumed price growth has been removed from the display.
The basket and assumption are held constant. The example explains two presentation bases; it does not predict anyone's personal inflation rate.
Illustrative only. The names and circumstances are fictional.Income sources may respond differently.
- CPP and OAS are adjusted under their program rules.
- Some workplace pensions are indexed, partly indexed or not indexed.
- A level annuity or other fixed payment may buy less as prices rise.
- Portfolio withdrawals can be changed, but the portfolio and spending plan must support the change.
Confirm the actual indexing terms with the pension administrator or provider. Do not assume every pension rises with CPI.
Quick Forecast shows results in today's dollars.
Its visible basis line identifies today's dollars, the return after inflation, the planning age and important items that are not modelled. The inflation input is used to express the forecast in today's purchasing power; changing it is a sensitivity test, not a prediction.
Explore it in your plan
Review the forecast basis and assumptions.
Read the basis line beside the result and open the assumptions disclosure. Keep the spending and income amounts you compare in today's dollars.
Official sources
These sources were reviewed August 17, 2026. Program rules and tax treatment can change; confirm the information that applies when acting.
- Bank of Canada: Inflation (opens in a new tab)
- Statistics Canada: Consumer Price Index portal (opens in a new tab)
- FCAC: Planning and saving for retirement (opens in a new tab)
Retired Kevin is not affiliated with or endorsed by these organizations.