The savings accounts of Canadians have sprung a leak.
As inflation tops eight percent, anyone with money in the bank is seeing their savings drip away at the fastest rate on record because interest rates for savings accounts, still largely languishing at around one percent, haven’t kept up.
“They will lose money. The value of their savings is decreasing,” said Claire Celerier, an associate professor of finance at the University of Toronto’s Rotman School of Management.
It’s a sharp contrast to the last time inflation ran this hot. In 1981, inflation peaked at over 12 percent, but Statistics Canada data says bank accounts were paying out 19 percent interest, and even in 1990 when inflation was running a little under five percent, accounts were paying out over nine percent….