As the pandemic continues to wreak havoc on supply chains and the labour market, British Columbians have felt the financial squeeze.
Experts don’t foresee much relief on the horizon in 2022 as the bill comes in for back-to-back natural disasters and the housing market continues to sizzle.
From food to fuel, here are four ways life is about to get more expensive in the New Year — and a handful of ways that it probably won’t.
Food
According to Canada’s Food Price Report for 2022, food prices are expected to increase between five and seven per cent in 2022. The costs of dairy products and restaurant bills will see the greatest cost increase — between six and eight per cent.
That could translate into nearly $1,000 extra dollars on the grocery bill for a Canadian family of four.
British Columbia, whose food prices were forecast to decrease in 2021, is now listed among the provinces where food prices will go up — at a “higher than average” rate, according to Sylvain Charlebois, project lead and director of the Agri-Food Analytics Lab at Dalhousie University.
“I think it has a lot to do with what happened recently with the floods,” he explained.
“We just surveyed Canadians on food access and generally speaking, about 20 to 22 per cent of Canadians have actually seen empty shelves due to supply chain issues but in B.C. it’s actually 41 per cent.”
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Fuel
Heating your home will become more expensive too.
FortisBC warned that gas rates will increase by 3.47 per cent this month to reflect the rising market price of the commodity. The utility provider expects rates to jump from $3.84 per gigajoule to roughly $4.50 per gigajoule.
“In terms of monthly impact, our customers are going to be looking at about a nine-per cent monthly impact on their bills … which works out to about $8 more per month,” said Diana Sorace, spokesperson for FortisBC in an interview.
Rates increased across the province by a similar amount in October and will be reviewed again in March.
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Taxes
British Columbia’s carbon tax will also increase from $45 to $50 per tonne of greenhouse gases on April 1, 2022. Its climate action tax credit, however, will follow suit three months later with an increase from $193.50 per adult and $56.50 per child.
British Columbians will see larger deductions on their pay stubs this year year.
The federal government has increased the Canada Pension Plan earnings ceiling at the highest rate in 30 years, meaning workers and businesses who contribute to the plan will take a hit.
The contribution rate for employees and employers is set to increase to 5.7 per cent in 2022, up from 5.45 per cent in 2021. The contribution for self-employed workers is scheduled to increase to 11.4 per cent, up from 10.9 per cent.
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This month, the city passed its 2022 budget, which included a 6.35 per cent hike in property taxes, largely attributed to increased spending on the Vancouver Police Department.
The tax hike is expected to cost the median condo owner an additional $6 per month in 2022. The owner of a median detached home will pay an extra $14 per month, and a median business property owner will pay another $26.
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Housing
Renters won’t be off the hook for increases either — the B.C. government’s province-wide pandemic freeze on rent expires on Dec. 31.
Effective Jan. 1, landlords can raise the rent by 1.5 per cent, provided three months’ notice has been provided, meaning many renters could be paying more in the New Year. The maximum allowable increase has been set based on the rate of inflation and can only be imposed on tenants once per year.
Those looking to buy a home can expect to pay a premium too, said Thomas Davidoff, as record-low home listings continue to drive up the sale price.
“I think in the short run, it seems like there are still more buyers and sellers out there, which tends to lead to price increases,” explained the associate professor at the UBC’s Sauder School of Business.
Low listings may lead to pent-up sellers, Davidoff added, but even if more homeowners sell in 2022, they’ll probably end up in the buyer’s market, keeping the pressure steady.
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According to the B.C. Real Estate Association, just under 9,600 homes were sold in October — a decrease of 13.7 per cent from the same month a year ago. The average price was $964,000, up almost 19 per cent from a year ago.
The Canadian Real Estate Association forecasts B.C. and Ontario will see the highest home prices in 2022 at $990,038 and $971,080 respectively.
The Bank of Canada aims to keep the annual inflation rate between one and three per cent in 2022. As employment numbers go up and economies rebound, it may increase its trendsetting interest rate — but not likely before April, it said in December.
In the long-term, rising interest rates could create “a rush to buy,” said Davidoff, followed by a “downward pressure” on the market when the costs of borrowing start to go up.
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Good news for insurance, hydro
While it may seem like everything is getting more expensive, there are a few costs that are not forecast to rise in the New Year.
There will be no basic rate change at ICBC until December 2022, meaning that if a change were required, it wouldn’t take effect until 2023.
The Insurance Bureau of Canada is “not expecting rate increases” for home insurance either, but noted that “severe weather trends are concerning.”
No single weather event leads to an increase in insurance premiums, wrote spokesperson Vanessa Barrasa by email, and if natural disasters were to affect premiums, it would happen “in time.”
BC Hydro has requested a rate decrease of 1.4 per cent in 2022, meaning the average residential customer will see savings of about $23 per year or $2 per month.
After that, the utility company has requested increases of 2 and 2.7 per cent for an annual average rate increase of 1.1 per cent over three years. The rates are still pending approval from the BC Utilities Commission.
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Squeeze on services
British Columbians will feel the impacts of the COVID-19 pandemic, the wildfires and the floods for many years to come, but the squeeze will manifest in different ways.
In order to keep economies moving through the crises, both the provincial and federal governments have taken on massive amounts of debt that could weigh down the budgets in 2022, according to Pedro Antunes.
“We’re not going to be able to spend as much as we wanted on health care,” said the chief economist for the Conference Board of Canada.
“As interest rates come up, we’re going to see the amount that we have to put towards financing the debt increasing. That’s going to take away from our ability to do other things we’d like to.”
While Antunes expects B.C.’s economy to rebound from many pandemic-induced effects this year, he said cuts to programs and services that matter to taxpayers may be on the horizon to help pay for it.
MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.
The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.
The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.
Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.
On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.
Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.
This report by The Canadian Press was first published Sept. 12, 2024.
Dollarama Inc.’s food aisles may have expanded far beyond sweet treats or piles of gum by the checkout counter in recent years, but its chief executive maintains his company is “not in the grocery business,” even if it’s keeping an eye on the sector.
“It’s just one small part of our store,” Neil Rossy told analysts on a Wednesday call, where he was questioned about the company’s food merchandise and rivals playing in the same space.
“We will keep an eye on all retailers — like all retailers keep an eye on us — to make sure that we’re competitive and we understand what’s out there.”
Over the last decade and as consumers have more recently sought deals, Dollarama’s food merchandise has expanded to include bread and pantry staples like cereal, rice and pasta sold at prices on par or below supermarkets.
However, the competition in the discount segment of the market Dollarama operates in intensified recently when the country’s biggest grocery chain began piloting a new ultra-discount store.
The No Name stores being tested by Loblaw Cos. Ltd. in Windsor, St. Catharines and Brockville, Ont., are billed as 20 per cent cheaper than discount retail competitors including No Frills. The grocery giant is able to offer such cost savings by relying on a smaller store footprint, fewer chilled products and a hearty range of No Name merchandise.
Though Rossy brushed off notions that his company is a supermarket challenger, grocers aren’t off his radar.
“All retailers in Canada are realistic about the fact that everyone is everyone’s competition on any given item or category,” he said.
Rossy declined to reveal how much of the chain’s sales would overlap with Loblaw or the food category, arguing the vast variety of items Dollarama sells is its strength rather than its grocery products alone.
“What makes Dollarama Dollarama is a very wide assortment of different departments that somewhat represent the old five-and-dime local convenience store,” he said.
The breadth of Dollarama’s offerings helped carry the company to a second-quarter profit of $285.9 million, up from $245.8 million in the same quarter last year as its sales rose 7.4 per cent.
The retailer said Wednesday the profit amounted to $1.02 per diluted share for the 13-week period ended July 28, up from 86 cents per diluted share a year earlier.
The period the quarter covers includes the start of summer, when Rossy said the weather was “terrible.”
“The weather got slightly better towards the end of the summer and our sales certainly increased, but not enough to make up for the season’s horrible start,” he said.
Sales totalled $1.56 billion for the quarter, up from $1.46 billion in the same quarter last year.
Comparable store sales, a key metric for retailers, increased 4.7 per cent, while the average transaction was down2.2 per cent and traffic was up seven per cent, RBC analyst Irene Nattel pointed out.
She told investors in a note that the numbers reflect “solid demand as cautious consumers focus on core consumables and everyday essentials.”
Analysts have attributed such behaviour to interest rates that have been slow to drop and high prices of key consumer goods, which are weighing on household budgets.
To cope, many Canadians have spent more time seeking deals, trading down to more affordable brands and forgoing small luxuries they would treat themselves to in better economic times.
“When people feel squeezed, they tend to shy away from discretionary, focus on the basics,” Rossy said. “When people are feeling good about their wallet, they tend to be more lax about the basics and more willing to spend on discretionary.”
The current economic situation has drawn in not just the average Canadian looking to save a buck or two, but also wealthier consumers.
“When the entire economy is feeling slightly squeezed, we get more consumers who might not have to or want to shop at a Dollarama generally or who enjoy shopping at a Dollarama but have the luxury of not having to worry about the price in some other store that they happen to be standing in that has those goods,” Rossy said.
“Well, when times are tougher, they’ll consider the extra five minutes to go to the store next door.”
This report by The Canadian Press was first published Sept. 11, 2024.
TORONTO – The U.S. Consumer Financial Protection Bureau has ordered TD Bank Group to pay US$28 million for repeatedly sharing inaccurate, negative information about its customers to consumer reporting companies.
The agency says TD has to pay US$7.76 million in total to tens of thousands of victims of its illegal actions, along with a US$20 million civil penalty.
It says TD shared information that contained systemic errors about credit card and bank deposit accounts to consumer reporting companies, which can include credit reports as well as screening reports for tenants and employees and other background checks.
CFPB director Rohit Chopra says in a statement that TD threatened the consumer reports of customers with fraudulent information then “barely lifted a finger to fix it,” and that regulators will need to “focus major attention” on TD Bank to change its course.
TD says in a statement it self-identified these issues and proactively worked to improve its practices, and that it is committed to delivering on its responsibilities to its customers.
The bank also faces scrutiny in the U.S. over its anti-money laundering program where it expects to pay more than US$3 billion in monetary penalties to resolve.
This report by The Canadian Press was first published Sept. 11, 2024.
