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A factor cooling inflation could soon end. What it means for the Bank of Canada – Global News

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The waning of a factor helping to push down inflation means the Bank of Canada will be relying on a pronounced slowdown in the economy this fall to keep prices from rising more, experts say.

The central bank has indeed seen substantial progress in cooling the headline inflation figure; economists who spoke to Global News expect Tuesday’s consumer price index report from Statistics Canada will show 2.9 per cent annual inflation, down from highs of 8.1 per cent last summer.

But it’s in part because of that exact comparison — last year’s decades-high levels of inflation versus today’s mostly milder price hikes — that’s yielding inflation rates that appear relatively tame.

It’s a consequence of the so-called “base-year effect” — and its positive impact on inflation will shortly fall out of StatCan’s annual calculations.


Click to play video: '‘That’s horse manure’: Shoppers angry about soaring food prices as inflation sinks to 2.8%'

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‘That’s horse manure’: Shoppers angry about soaring food prices as inflation sinks to 2.8%


“A lot of the base-year effects, in terms of pushing inflation rates lower, are in the past,” says RBC’s assistant chief economist Nathan Janzen in an interview with Global News.

One of the reasons Janzen expects inflation will have ticked up by a 10th of a percentage point in July is the recent run-up in gas prices.

While Canadians might be paying a bit more at the pump as of late, prices remain largely lower than the peaks of last summer when many motorists across the country were facing down $2 per litre of regular gasoline. Those high gas prices were a major fuel for rampant inflation in the summer of 2022.

Since inflation is calculated as a comparison of prices this year from last, rising gasoline prices can still be an overall drag on this July’s headline CPI figures, Janzen explains.

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“That’s not because energy prices are particularly low — oil prices are still over US$80 a barrel — it’s just that they were substantially, substantially higher than a year ago,” he says.

The base-year effect can seem a bit like an illusion when it comes to how Canadians experience inflation, says Tu Nguyen, economist at RSM Canada.

“When we compare prices this year to last year, it might look like inflation has gone down,” she says. “Whereas for families, for households and businesses, prices are still very high.”

The base-year effect can also work in reverse, making inflation seem, well, inflated, after a year of relatively low price pressures.

While in this case the base-year effect has been a boon for the Bank of Canada in bringing headline inflation back into its one-to-three per cent target range, that particular headwind will be fading heading into the fall, experts warn.

While fuel prices began to calm in the late summer months of 2022, gas prices are continuing to rise this year heading into August.

With less help from the base-year effect going forward, annual inflation could well tick up again in the months to come, Janzen says.


Click to play video: 'GTA gas prices set to climb to highs not seen since last November'

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GTA gas prices set to climb to highs not seen since last November


But Nguyen tells Global News that even as the base-year effect wanes in the fall, the Bank of Canada is expected to receive some support in its inflation fight thanks to the impact of its interest rate hikes to date.

Many economists are expecting a long-awaited slowdown in the economy this fall. That should see households cool spending demand, in turn putting less pressure on inflation.

That could offset the impact of a diminished base-year effect and help keep annual inflation in the Bank of Canada’s one-to-three per cent range, Nguyen argues.

The central bank is also not likely to respond forcefully to inflation pressures tied to the volatile energy market, Janzen notes.

Rather, he says the Bank of Canada will be looking more closely at its preferred core measures of inflation and shorter-term three-month gauges of pricing momentum in making its remaining rate decisions this year.

Both Janzen and Nguyen believe the signs of easing in the labour market and other aspects of the economy will be sufficient to keep the Bank of Canada on the sidelines of its rate hike cycle for the rest of the year.

Janzen notes, however, that core inflation measures have been “sticky,” and if they show signs of flaring up in the months to come, the Bank of Canada could be forced back to the table for additional rate increases.

“The Bank of Canada has one policy mandate, and that’s to target low and stable inflation, which they define as two per cent,” he says. “So they will respond if they do with higher interest rates.”


Click to play video: 'Business News: Interest rate hike still looms'

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Business News: Interest rate hike still looms


&copy 2023 Global News, a division of Corus Entertainment Inc.

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Advocates urge Ontario to change funding for breast prostheses, ostomy supplies

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TORONTO – Advocates for breast cancer survivors and people who have had ostomy surgeries, such as colostomies, are calling for changes to the way an Ontario program covers certain medical devices, saying it leaves them paying a lot of money out of pocket.

The Assistive Devices Program partly funds the cost of equipment, such as wheelchairs, insulin pumps and hearing aids, for people with long-term disabilities.

For most of the devices covered under the program, the province pays 75 per cent of the cost, but the funding for breast prostheses and ostomy devices is set at specific dollar amounts, which users and advocates say amounts to far less than 75 per cent of the total price.

People who have had a mastectomy due to breast cancer, for example, can get reconstruction surgeries that are covered by the provincial health plan.

But if they don’t qualify for the surgeries or want them, they can instead get an external breast prosthesis that fits inside special mastectomy bras. The province currently covers $195 for one prosthesis, but they can cost $400 to $500, advocates say.

That amount of $195 was set back in 2006. The Ministry of Health reviewed it in 2011, but made no change. It is now outdated, said Vanessa Freeman, a board member of the group Speaking of Breasts — Advocacy for Solutions.

“It’s not really keeping up with the times, like the cost of living right now. Things have changed substantially,” she said.

Freeman owns Pink Ribbon Boutique, a mastectomy bra boutique, and said she gets some customers to donate used prostheses back to the store.

“We just try to do whatever we can to help, but it’s not really sustainable or truly enough,” she said.

When Freeman’s mother, a three-time breast cancer survivor, discovered she had a gene mutation that had put her at a higher risk for developing breast cancer, Freeman got tested.

In 2016, she found out she had the same mutation. She decided to have a prophylactic double mastectomy.

There are physical implications to losing your breasts, she said, such as the pinched nerves and the neck and shoulder pain that result from a sudden shift in the balance of your body.

The mental implications, she added, are harder to put into words.

“From a young age, I think as women, we’ve kind of been told there’s certain things that make us feminine, those are the things that define us — so breasts, hair, these kinds of things,” Freeman said.

“I wanted to believe that I was bigger than that or that it was some sort of badge to not be affected by it, but … it really hits you in a lot of ways that you don’t necessarily anticipate, even to this day. I have done a lot of work to try to make peace with the way that my body is, and I think I’ve come a long way.”

Therapy has really helped, but that also comes with an additional cost, she said. “That’s not always available to people.”

Kelly Wilson Cull, director of advocacy for the Canadian Cancer Society, said people should not have to pay out of pocket for products and services that they need in their cancer recovery.

“In a country like Canada, people often think that we have universal health care and that cancer wouldn’t come with a bill, but that’s certainly not the case,” she said.

“Getting back to a new normal, and getting back to work and sort of reintegrating into your life after cancer, just having those tools to build self esteem and build normalcy is so critical to the huge emotional journey that comes with a cancer diagnosis.”

The Ostomy Canada Society also said it hears from people in Ontario who have had ostomy surgeries — procedures that create a new opening to bypass problems with the bladder or bowel — who have trouble affording the supplies they need, such as the pouches that collect waste.

The assistive devices program pays $975 per ostomy per year, but the average annual cost for supplies is around $2,500, said Ian MacNeil, who does advocacy and government relations for the society.

“Frequently they have to make decisions on paying the rent, sometimes, it’s, ‘What can I get at the grocery store and not get because I’ve got these supplies to purchase,'” he said.

“So it can be very, very problematic.”

The last update to the amount of funding came in 2015, MacNeil said. People who receive social assistance or live in a long-term care home receive $1,300 per ostomy per year.

“We have been hammering the Ontario government for a change, but we haven’t had any success thus far,” MacNeil said.

A Ministry of Health spokesperson said price and funding reviews for breast prostheses and ostomy supplies in the Assistive Devices Program take into account the average annual client cost.

“No additional reviews are planned for this time,” W.D. Lighthall wrote in a statement. “Grant amounts for ADP devices are based on stakeholder input, client input and jurisdictional reviews.”

This report by The Canadian Press was first published Oct. 18, 2024.

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US to probe Tesla’s ‘Full Self-Driving’ system after pedestrian killed in low visibility conditions

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DETROIT (AP) — The U.S. government‘s road safety agency is investigating Tesla’s “Full Self-Driving” system after getting reports of crashes in low-visibility conditions, including one that killed a pedestrian.

The National Highway Traffic Safety Administration says in documents that it opened the probe on Thursday after the company reported four crashes when Teslas encountered sun glare, fog and airborne dust.

In addition to the pedestrian’s death, another crash involved an injury, the agency said.

Investigators will look into the ability of “Full Self-Driving” to “detect and respond appropriately to reduced roadway visibility conditions, and if so, the contributing circumstances for these crashes.”

The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.

A message was left early Friday seeking comment from Tesla, which has repeatedly said the system cannot drive itself and human drivers must be ready to intervene at all times.

Last week Tesla held an event at a Hollywood studio to unveil a fully autonomous robotaxi without a steering wheel or pedals. Musk, who has promised autonomous vehicles before, said the company plans to have them running without human drivers next year, and robotaxis available in 2026.

The agency also said it would look into whether any other similar crashes involving “Full Self-Driving” have happened in low visibility conditions, and it will seek information from the company on whether any updates affected the system’s performance in those conditions.

“In particular, this review will assess the timing, purpose and capabilities of any such updates, as well as Telsa’s assessment of their safety impact,” the documents said.

Tesla has twice recalled “Full Self-Driving” under pressure from the agency, which in July sought information from law enforcement and the company after a Tesla using the system struck and killed a motorcyclist near Seattle.

The recalls were issued because the system was programmed to run stop signs at slow speeds and because the system disobeyed other traffic laws. Both problems were to be fixed with online software updates.

Critics have said that Tesla’s system, which uses only cameras to spot hazards, doesn’t have proper sensors to be fully self driving. Nearly all other companies working on autonomous vehicles use radar and laser sensors in addition to cameras to see better in the dark or poor visibility conditions.

The “Full Self-Driving” recalls arrived after a three-year investigation into Tesla’s less-sophisticated Autopilot system crashing into emergency and other vehicles parked on highways, many with warning lights flashing.

That investigation was closed last April after the agency pressured Tesla into recalling its vehicles to bolster a weak system that made sure drivers are paying attention. A few weeks after the recall, NHTSA began investigating whether the recall was working.

The investigation that was opened Thursday enters new territory for NHTSA, which previously had viewed Tesla’s systems as assisting drivers rather than driving themselves. With the new probe, the agency is focusing on the capabilities of “Full Self-Driving” rather than simply making sure drivers are paying attention.

Michael Brooks, executive director of the nonprofit Center for Auto Safety, said the previous investigation of Autopilot didn’t look at why the Teslas weren’t seeing and stopping for emergency vehicles.

“Before they were kind of putting the onus on the driver rather than the car,” he said. “Here they’re saying these systems are not capable of appropriately detecting safety hazards whether the drivers are paying attention or not.”

The Canadian Press. All rights reserved.

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Rwanda shrugs off ‘sportswashing’ criticism in pursuit of a winning development formula

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NAIROBI, Kenya (AP) — He may be the president of a small, landlocked state in central Africa, but Paul Kagame has always had outsize dreams.

In recent months, Rwanda’s president has embarked on perhaps the biggest of them all by pitching to bring a Formula 1 Grand Prix to a country that was mired in genocide 30 years ago but now sees itself as one of the continent’s leaders.

Determined to overcome his country’s geographical disadvantages, Kagame has relentlessly pursued a political, diplomatic and economic strategy to make Rwanda an African heavyweight.

In the past four years, he has sent troops to engage rebels in the Central African Republic and mount counterinsurgency operations in Mozambique.

At home he has pursued economic reforms to lure foreign investors, transforming Rwanda into a country with a reputation as one of Africa’s least corrupt and most business friendly, despite Kagame’s own reputation as a democratic laggard.

But when it comes to sport, his aspirations extend well beyond Africa.

Since 2018, his government has secured sponsorship deals with some of Europe’s biggest soccer clubs, developed a partnership with the NBA and spent hundreds of millions of dollars in developing Rwanda’s sports facilities.

Next year Rwanda will stage the world championships for bicycle road racing.

Kagame himself has built a close working relationship with Gianni Infantino, the president of FIFA, which has opened an office in Rwanda and held its annual meeting there last year.

Now he is taking the biggest step yet in his ambition to transform the country into a global sporting power, with F1 executives confirming that they are in exploratory talks with Kagame’s government about a possible Rwandan Grand Prix.

Experts say that could require billions of dollars in investment and outlay. Given that Gross Domestic Product stands at just $14.1 billion and that there is at yet no track on which to host a race, the idea of a Rwandan Grand Prix might seem far-fetched.

Yet with seven-time world champion Lewis Hamilton pushing for an African F1 race and given Rwanda’s reputation as one of the continent’s more reliable and transparent states, it is not impossible either.

Stefano Domenicali, F1’s chief executive, has described Rwanda’s proposal as “serious”, telling motorsport.com that “they have presented a good plan.”

“We want to go to Africa, but we need to have the right investment, and the right strategic plan,” he added.

The country’s motorsports profile may receive a boost when the FIA’s governing body hosts its annual general assembly and prize giving in Kigali, Rwanda’s capital, in December—the first time the ceremony has been held in Africa.

Both the Kagame administration and F1 officials are reluctant to reveal details about what they describe as “ongoing” discussions, but Rwandan government spokeswoman Yolande Makolo said hosting an F1 race would allow the country to move “from being a consumer of sport to a participant in the business of sports.”

“Rwanda’s interest in Formula 1 aligns with our strategy to leverage sports for transformative impact,” she said. “We seek every opportunity to drive forward Rwanda’s development, including through global sporting partnerships.”

Rwanda is not alone in seeking an F1 race, with potential competitors also in Africa. South Africa, which hosted Africa’s last Grand Prix in 1993, and Morocco, which staged 13 races between 1925 and 1958, are also reportedly keen to reenter the fray.

That Rwanda is bidding at all reveals much about how Kagame views sport as an economic and geopolitical weapon.

If Rwanda can navigate the obvious economic risks, its ambitious sporting strategy could yield big dividends, both financially and diplomatically. The Seoul Olympics in 1988 helped South Korea transform its global image as an insulated, war-ravaged backwater to an emerging economy open to the world.

Although no other sub-Saharan country has quite such a comprehensive and ambitious strategy, Rwanda is following the example of countries like Saudi Arabia, Bahrain and Qatar, which have used sport — including the hosting of Grand Prix races — to boost their reputations abroad.

Like them, Rwanda has faced criticism that it is using sport to distract attention from a chequered human rights record.

Kagame, who secured 99.2 percent of the vote in July’s presidential election, is accused of using increasingly repressive methods to consolidate his 30-year grip on power. Critics of his ruling Rwandan Patriotic Front have experienced intimidation, arrest and even death.

Meanwhile, the United Nations has accused Kagame’s government of stoking, funding and arming a rebellion in the Democratic Republic of Congo, Rwanda’s troubled neighbour to the east. The United States cut military aid to Rwanda in protest.

Both Rwanda and its international sporting partners have faced accusations that they are using sport to divert attention from Kagame’s rights record, a practice known as “sportswashing.”

In August, two U.S. senators, Republican Marsha Blackburn and Democrat Jeff Merkley, wrote to the NBA accusing it of “putting profit over principle” by forging close ties with the Rwandan government.

Some European lawmakers have raised similar objections to question Rwanda’s sponsorship of soccer clubs Arsenal, Paris Saint Germain and Bayern Munich, a strategy Kagame’s government says will boost tourism.

The prospect of a Rwandan F1 race has renewed such criticism.

“The critical question is what kind of due diligence Formula 1 did to ensure it lives up to its own stated human rights commitments and avoid contributing to laundering the Rwandan government’s human rights record,” said Clementine de Montjoye, senior researcher in the Africa division at Human Rights Watch. “Rwanda’s partners should open their eyes and see Kigali’s wide-reaching human rights abuse for what it is: the consequence of three decades of impunity for the ruling Rwandan Patriotic Front.”

Rwanda is far from the only country with a contentious rights record that has used sport to shape a different narrative about itself. Saudi Arabia, stung by scrutiny following the murder of journalist Jamal Khashoggi in 2018, has invested more than $10 billion in sport, including golf, F1 and soccer. Infantino has steered the men’s 2034 World Cup hosting rights toward Saudi Arabia.

Qatar, which has close commercial links with Rwanda, spent $230 billion on hosting the 2018 FIFA World Cup.

Yet Rwanda is a financial minnow in comparison and depends on donor aid to fund 40 percent of government expenditure, leading to questions about the wisdom of seeking to emulate Gulf petrostates.

“The Saudis employed this sort of strategy to get people to forget about awkward things like dismembering journalists,” said Michela Wrong, author of “Do Not Disturb,” a book critical of Kagame. “But the difference is Saudi Arabia can afford these deals. Rwanda can’t. Rwanda is a very poor country, heavily dependent on subsistence agriculture and foreign aid, which is pouring millions of dollars into some of the world’s richest clubs. There is something innately distasteful about this.”

There is little doubt that Kagame’s sports strategy is an economic gamble.

Despite his business-friendly policies, Rwanda’s market has proved too small to lure significant inward investment, something that hosting big-ticket sporting events could go some way to address, particularly if it gains “first mover advantage” by getting ahead of other African rivals.

On the other hand, even richer states have struggled to make event hosting pay.

“Sporting events are incredibly expensive to stage and the net impact is very often negative rather than positive,” says Simon Chadwick, a professor of sport and geopolitical economy. “For Rwanda, given its relative economic weakness, this will be a concern.”

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