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What you need to know about inflation – CTV News

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3 years ago

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In December before the Surrey Board of Trade, Deputy Bank of Canada Governor Toni Gravelle spoke of how our economy has come a long way since the pandemic struck and essentially shut the economy down. We are “well down the road to a full recovery,” he said. “But we are still feeling the impacts of the pandemic.”

Gravelle outlined the bank’s top two concerns were supply shortages and the elevated rate of inflation.

Whether it be food, gas, or housing prices, inflation is becoming a global concern during the pandemic. In a recent Nanos survey, inflation and cost of living were listed as the top source of anxiety. In fact, the poll found that Canadians are nearly nine times (87%) more likely to say they’re worried more about higher prices for everyday goods rather than higher interest rates (10%). 

Ahead of the Consumer Price Index (CPI) numbers due to be released on Jan. 19, CTVNews.ca spoke with experts and included a few graphs below to explain why inflation is on top of everyone’s mind, how the pandemic has impacted it, and how Canada compares on that front with G7 nations.

What is inflation and why does it matter?

The consumer price index, better known as CPI, is the most common system to gauge inflation. It measures the cost of living by looking at the prices of goods and services that people typically buy such as food, housing, transportation, furniture, clothing, recreation, and other items.

Like most central banks, the Bank of Canada monitors “core inflation” that focuses on the underlying trend of inflation, looking through the short-term fluctuations or temporary shifts in the total CPI.

The current inflation is 4.7 per cent, significantly higher than the top of the Bank’s inflation-control range. The Bank of Canada aims to keep inflation at the 2 per cent mid-point of an inflation-control target range of 1 to 3 per cent. Low and stable inflation contributes to sustainable economic growth. The balance between the demand and the economy’s production capacity determines inflation.

The Bank becomes concerned if the inflation rises above or falls below the 2 per cent target. A high inflation reduces the purchasing power of a household or an individual and can significantly impact household budgets. High prices can change our shopping habits, investments, travel, transport, and even medical expenses.

Negative rates often create a period of deflation, which means a decline in the prices of goods and services, giving more purchasing power to consumers. While falling prices sound like a good thing, a persistent decline in prices can negatively impact an economy. The effect is negative for debtors who have failing businesses or have declining income since the real value of debt payments for them can increase. In the same way, if prices and income fall, tax revenues can fall and impact government spending. One major example of sustained deflation in Canada was in the Great Depression of the 1930s.

How is inflation monitored?

The Bank of Canada conducts monetary policies to ensure the inflation target is maintained. It usually takes about six to eight quarters to see the impact of the tools used to combat inflation and that’s one reason that monetary policies are always forward-looking.

The Bank relies on different tools to control the money supply in the market such as large asset purchases (quantitative easing and credit easing), funding for credit measures, and negative policy rates.

To stimulate the economy and encourage borrowing, spending, and investment, the central bank can resort to an unconventional tool known as the negative policy rate where it sets its target nominal interest rate to less than zero per cent. In the light of the 2008 subprime mortgage crises, several nations such as Japan and Europe had resorted to zero policy rates.

However, pushing rates to below zero impacts short-term interest rates and can eventually affect mortgages, lines of credit, and other, longer-term interest rates that matter to average Canadians. The Bank of Canada uses other tools such as quantitative easing to support low policy rates. Quantitative easing is when central banks pay for bond purchases with settlement balances (not bank notes). The Bank buys bonds that have already been sold by the government to banks and other financial institutions. In credit easing, the Bank can also buy corporate bonds from financial institutions, which can support the economy, making it cheaper for companies to invest and create more jobs.

All these policies indirectly affect the total demand for Canadian goods and services.

Impact of the pandemic on inflation

With the new variants, the pandemic has taken an unprecedented turn. When compared to other advanced economies, Canada’s inflation is on the lower end. The U.S. has recorded an inflation rate of 7 per cent, the highest since 1982. Leading contributors to the U.S. inflation were housing, cars, and trucks. According to a survey of 900 global CEOs, rising inflation, labor shortages, supply chain disruptions, and changing consumer behaviors were top worries.

Due to factors such as rising demand for oil and gas, the shortage of many goods, supply shortages, the cost of living in the U.K. rose by 5.1 per cent, the highest in 10 years. A recent survey by the British Chambers of Commerce said that 58 per cent of firms expected their prices to increase in the next three months, the highest on record. Of those surveyed, 66 per cent of businesses cited inflation as a concern.

Energy prices and supply rate disruptions have pushed inflation in Europe’s second-largest economy, France as well.

One of the biggest impacts of the pandemic has been on the supply chain, which is pushing inflation globally and in Canada as well, driving up everything from cars and furniture to food and shelter.

“Supply chain networks have been disrupted globally,” Sal Guatieri, senior economist and director at BMO Capital Markets told CTVNews.ca on Monday.

He said factories are getting closed either due to a shortage of staff because people are sick or under quarantine. This indirectly impacts the steady supply of raw materials that are used in the manufacturing process globally.

Guatieri said at the same time the cost of freight across oceans has increased due to the shortage of truck drivers. So all these costs are getting passed on to the consumers. But aside from the supply chain disruptions, inflation is also impacted by several other factors such as food prices, gasoline prices, house prices, homeowner replacement costs, energy prices, and motor vehicles costs. In 2021, global food prices rose ‘sharply’, according to a recent report by United Nations (UN). The agency’s Food Price Index, which tracks monthly changes in international prices showed a 28% increase over 2020. The reason for this jump was the high cost of inputs, ongoing pandemic, and volatile climatic conditions.

Guatieri said a source of upward pressure on inflation has been a rebound in some of the hard-hit service areas such as travel and car prices. Hotel costs and airfares have climbed in the past year and could be a source of upward pressure on inflation. Car prices have been impacted by chip shortages, resulting in the highest costs and shortage of new vehicles. Gualtieri said homeowner displacements costs could be a big source in driving up inflation. With house prices accelerating, more people could be pushed into the rental market because they can’t afford a home, he added. 

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Bad traffic, changed plans: Toronto braces for uncertainty of its Taylor Swift Era

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8 hours ago

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November 13, 2024

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TORONTO – Will Taylor Swift bring chaos or do we all need to calm down?

It’s a question many Torontonians are asking this week as the city braces for the arrival of Swifties, the massive fan base of one of the world’s biggest pop stars.

Hundreds of thousands are expected to descend on the downtown core for the singer’s six concerts which kick off Thursday at the Rogers Centre and run until Nov. 23.

And while their arrival will be a boon to tourism dollars — the city estimates more than $282 million in economic impact — some worry it could worsen Toronto’s gridlock by clogging streets that already come to a standstill during rush hour.

Swift’s shows are set to collide with sports events at the nearby Scotiabank Arena, including a Raptors game on Friday and a Leafs game on Saturday.

Some residents and local businesses have already adjusted their plans to avoid the area and its planned road closures.

Aahil Dayani says he and some friends intended to throw a birthday bash for one of their pals until they realized it would overlap with the concerts.

“Something as simple as getting together and having dinner is now thrown out the window,” he said.

Dayani says the group rescheduled the gathering for after Swift leaves town. In the meantime, he plans to hunker down at his Toronto residence.

“Her coming into town has kind of changed up my social life,” he added.

“We’re pretty much just not doing anything.”

Max Sinclair, chief executive and founder of A.I. technology firm Ecomtent, suggested his employees avoid the company’s downtown offices on concert days, saying he doesn’t see the point in forcing people to endure potential traffic jams.

“It’s going to be less productive for us, and it’s going to be just a pain for everyone, so it’s easier to avoid it,” Sinclair said.

“We’re a hybrid company, so we can be flexible. It just makes sense.”

Swift’s concerts are the latest pop culture moment to draw attention to Toronto’s notoriously disastrous daily commute.

In June, One Direction singer Niall Horan uploaded a social media video of himself walking through traffic to reach the venue for his concert.

“Traffic’s too bad in Toronto, so we’re walking to the venue,” he wrote in the post.

Toronto Transit Commission spokesperson Stuart Green says the public agency has been working for more than a year on plans to ease the pressure of so many Swifties in one confined area.

“We are preparing for something that would be akin to maybe the Beatles coming in the ‘60s,” he said.

Dozens of buses and streetcars have been added to transit routes around the stadium, and the TTC has consulted the city on potential emergency scenarios.

Green will be part of a command centre operated by the City of Toronto and staffed by Toronto police leaders, emergency services and others who have handled massive gatherings including the Raptors’ NBA championship parade in 2019.

“There may be some who will say we’re over-preparing, and that’s fair,” Green said.

“But we know based on what’s happened in other places, better to be over-prepared than under-prepared.”

Metrolinx, the agency for Ontario’s GO Transit system, has also added extra trips and extended hours in some regions to accommodate fans looking to travel home.

A day before Swift’s first performance, the city began clearing out tents belonging to homeless people near the venue. The city said two people were offered space in a shelter.

“As the area around Rogers Centre is expected to receive a high volume of foot traffic in the coming days, this area has been prioritized for outreach work to ensure the safety of individuals in encampments, other residents, businesses and visitors — as is standard for large-scale events,” city spokesperson Russell Baker said in a statement.

Homeless advocate Diana Chan McNally questioned whether money and optics were behind the measure.

“People (in the area) are already in close proximity to concerts, sports games, and other events that generate massive amounts of traffic — that’s nothing new,” she said in a statement.

“If people were offered and willingly accepted a shelter space, free of coercion, I support that fully — that’s how it should happen.”

This report by The Canadian Press was first published Nov. 13, 2024.



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‘It’s literally incredible’: Swifties line up for merch ahead of Toronto concerts

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November 13, 2024

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TORONTO – Hundreds of Taylor Swift fans lined up outside the gates of Toronto’s Rogers Centre Wednesday, with hopes of snagging some of the pop star’s merchandise on the eve of the first of her six sold-out shows in the city.

Swift is slated to perform at the venue from Thursday to Saturday, and the following week from Nov. 21 to Nov. 23, with concert merchandise available for sale on some non-show days.

Swifties were all smiles as they left the merch shop, their arms full of sweaters and posters bearing pictures of the star and her Eras Tour logo.

Among them was Zoe Haronitis, 22, who said she waited in line for about two hours to get $300 worth of merchandise, including some apparel for her friends.

Haronitis endured the autumn cold and the hefty price tag even though she hasn’t secured a concert ticket. She said she’s hunting down a resale ticket and plans to spend up to $600.

“I haven’t really budgeted anything,” Haronitis said. “I don’t care how much money I spent. That was kind of my mindset.”

The megastar’s merchandise costs up to $115 for a sweater, and $30 for tote bags and other accessories.

Rachel Renwick, 28, also waited a couple of hours in line for merchandise, but only spent about $70 after learning that a coveted blue sweater and a crewneck had been snatched up by other eager fans before she got to the shop. She had been prepared to spend much more, she said.

“The two prized items sold out. I think a lot more damage would have been done,” Renwick said, adding she’s still determined to buy a sweater at a later date.

Renwick estimated she’s spent about $500 in total on “all-things Eras Tour,” including her concert outfit and merchandise.

The long queue for Swift merch is just a snapshot of what the city will see in the coming days. It’s estimated that up to 500,000 visitors from outside Toronto will be in town during the concert period.

Tens of thousands more are also expected to attend Taylgate’24, an unofficial Swiftie fan event scheduled to be held at the nearby Metro Toronto Convention Centre.

Meanwhile, Destination Toronto has said it anticipates the economic impact of the Eras Tour could grow to $282 million as the money continues to circulate.

But for fans like Haronitis, the experience in Toronto comes down to the Swiftie community. Knowing that Swift is going to be in the city for six shows and seeing hundreds gather just for merchandise is “awesome,” she said.

Even though Haronitis hasn’t officially bought her ticket yet, she said she’s excited to see the megastar.

“It’s literally incredible.”

This report by The Canadian Press was first published Nov. 13, 2024.

The Canadian Press. All rights reserved.



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Via Rail seeks judicial review on CN’s speed restrictions

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10 hours ago

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November 13, 2024

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OTTAWA – Via Rail is asking for a judicial review on the reasons why Canadian National Railway Co. has imposed speed restrictions on its new passenger trains.

The Crown corporation says it is seeking the review from the Federal Court after many attempts at dialogue with the company did not yield valid reasoning for the change.

It says the restrictions imposed last month are causing daily delays on Via Rail’s Québec City-Windsor corridor, affecting thousands of passengers and damaging Via Rail’s reputation with travellers.

CN says in a statement that it imposed the restrictions at rail crossings given the industry’s experience and known risks associated with similar trains.

The company says Via has asked the courts to weigh in even though Via has agreed to buy the equipment needed to permanently fix the issues.

Via said in October that no incidents at level crossings have been reported in the two years since it put 16 Siemens Venture trains into operation.

This report by The Canadian Press was first published Nov. 13, 2024.

Companies in this story: (TSX:CN)

The Canadian Press. All rights reserved.



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