Step 1

Visit FRED website (https://fred.stlouisfed.org/) and search for "consumer price index all items in Canada" in the search box. When you click on the appropriate data, you will see the time series plot of the variable. Note that on the top right of the graph there are options "edit graph". Change the variable to "quarterly data". You should also change the units to "change from year ago, index 2015." Please note, you need to download the graph by clicking on the download option on top right of the graph and attach the graph along with your answer.

Step 2

Search for the "implicit price deflator Canada" in the search box and repeat the same steps as described in step 1 for the "consumer price index all items in Canada".

Question:

What was the rate of inflation in the first quarter of 2021 based on each measure? Provide an economic explanation why one is greater than the other. (Hint: you can think of relative price of consumer goods to all goods)