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Statistics Canada had its crack at reporting the latest inflation rate. Now it's my turn.

Let's see. The price of bus tickets here in Ottawa has just surged to $1.15 from $1, or 15 per cent (this after a three-month bus strike this past winter, but never mind). The monthly cable and Internet bill is up 4.2 per cent from earlier this year. The annual car and home insurance bills, which I paid in the past couple of months, were up 15.8 and 6.9 per cent, respectively, from a year ago. Property taxes, which I finished paying off last month, were up just under 4 per cent from 2008.

Gasoline is about the only thing I can think of that has fallen noticeably and had an impact on our family cash flow. The price for regular gas in Ottawa was about 88 cents a litre yesterday, down from $1.36 a year ago.

Depending on how you read Statscan's inflation report last Friday, the cost of living either fell a little bit in June or rose by a routine amount. Regardless of which view you choose, we're seeing the word deflation - falling prices, in very simple terms - being thrown around a fair bit these days, both here and globally.

Meanwhile, inflation is far from dead at our house. In fact, I have to wonder as a bill payer if I'm being squeezed to make up for revenue shortfalls caused by the very recession that is supposedly causing a risk of deflation.

The 0.3-per-cent decline in the headline inflation rate in June was notable because it was the first monthly year-over-year drop in 15 years. The biggest contributor to this decline: energy. In fact, if you took energy out of the calculation, inflation actually moved up 2.1 per cent last month.

While the all-in cost of living fell in June, this is not true deflation. For that, we need sustained declines in prices that cause consumers to stop buying things in the hope of being rewarded for their patience with lower costs.

A deflationary period in Japan from the late 1990s to the middle of this decade caused a long period of economic stagnation. From an investment point of view, deflation would be a disaster because it would entail ultralow interest rates coupled with poor stock markets.

With energy prices being the prime driver of lower living costs last month, many economists don't believe we face any risk of true deflation.

"The whole deflation topic has been blown out of proportion in the media," said Krishen Rangasamy, an economist at CIBC World Markets.

But that doesn't mean the matter is settled.

Check out money manager Eric Sprott's July investment commentary (go to Sprott.com and check under Markets at a Glance). He and his colleague David Franklin never actually use the word deflation, but they provide a bleak economic outlook in the United States that could lead to falling prices. Their evidence includes things like declining retail sales and tax revenue and idle industrial production.

"We are now in the early stages of a depression," they write. "The economic indicators we follow to track real economic activity are all signalling a slowdown of massive proportions."

Deflation is already threatening in Japan for a second time this decade. If swine flu fares up again when the weather cools down, there's speculation that it could nudge a struggling global economy into deflation.

Still, at ground level where people work, spend and pay bills, signs of deflation are tough to find. CIBC's Mr. Rangasamy sees shelter costs falling some more because of mortgage rates and declines in the cost of natural gas, which is used in home heating. He also mentioned car prices as an example of a product where prices have been falling.

Got the picture? If you're not buying a new car, or if you haven't set up or renewed a mortgage, you're missing out on two major categories of price declines.

It all comes down to energy, then. If you drive a lot, your personal inflation rate may be down. If you don't, then you may be paying more for goods and services at a time when the term deflation is being tossed around.

Let's remember that true deflation is marked by the reluctance of consumers to buy things because they expect better deals ahead. That's the opposite of what's happening in two prominent areas. Far from waiting to buy homes, people are jumping back into the market. New car sales are still down, but the pace of decline has been easing.

Rule out nothing with an economic slump as nasty as the one we're in now. But worry about deflation? At our house, the bills coming in tell us inflation's the bigger problem.

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