Inflation cooled to 3.8 per cent nationally last month, Statistics Canada said Tuesday, down from 4.0 per cent in August and snapping a streak of two consecutive monthly accelerations.
The annual rate of inflation saw a “broad-based” slowdown in September amid signs of continuing relief at the grocery store, the agency said.
StatCan said Canadians saw prices at the grocery store rise 5.8 per cent in September, cooling from the 6.9 per cent increase in August.
Price growth for meat, dairy products, vegetables and coffee and tea all decelerated month-to-month, though edible fats and oils, bakery products, fish and fresh fruit saw costs rise quicker.
A number of food staples saw prices grow at a slower pace last month than in August.
Statistics Canada / Global News
Mike von Massow, a food economist with the University of Guelph, told Global News on Tuesday that the easing in price growth at the grocery store was largely foreseen — and it’s a trend he expects to continue.
Months of higher grocery price hikes from last year are falling out of the annual inflation comparison, he notes, and food costs tend to cool in the late summer and early fall months.
“There’s still room for things to upset the apple cart, but overall, I’m optimistic that we will continue to see food inflation come down and perhaps even see one more month of price decreases, and that that will make it a little easier we get into the holiday season,” von Massow said.
There are still risks that could drive prices up on individual baskets of goods, such as concerns about a repeat of last year’s disease in California crops such as lettuce, von Massow noted, but those impacts won’t hit consumers as hard as the “perfect storm” Canadians faced at the grocery store this past year.
One of the most significant drivers of food inflation has been Russia’s invasion of Ukraine — a region known colloquially as the world’s bread basket — which disrupted flows of goods and drove up prices for wheat and other commodities.
The freshly unfolding conflict in Israel and Gaza is unlikely to have as much impact on global food supply chains, von Massow said, with North American food suppliers getting limited greenhouse products from the region. But he said there remains a risk that if the conflict escalates and spreads to include additional Middle Eastern powers, that more parts of the supply chain could be impacted.
“That’s not to say it’s not a significant event, but it’s not something that we should see dramatic impacts in North American grocery stores,” von Massow said.
Higher costs for mortgages and rents were the main factors fuelling inflation in the September, StatCan said.
At the fuel pumps, gasoline prices rose 7.5 per cent year-over-year, but they declined slightly on a monthly basis, according to the agency.
Canadians also saw outright declines in the cost of airfare in the month, with prices down 21.1 per cent year-over-year. StatCan noted the price drop coincided with a gradual increase in flights on offer from airlines over the past year.
Canadians also saw prices drop annually on durable goods including furniture and appliances. New passenger vehicles saw prices grow at a slower rate in September, which StatCan attributed to better stock for new cars in the market.
What does this mean for the Bank of Canada?
The Bank of Canada is set to make another interest rate decision on Oct. 25. with the inflation print marking one of the final data releases for policymakers before next week’s rate call.
Inflation has proved stubborn in recent months, rising in July and August after hitting a low of 2.8 per cent in June. The Bank of Canada has expressed concern that despite progress to date on taming price pressures, annual inflation could get stuck above the central bank’s two per cent target.
The central bank’s closely watched metrics of core inflations cooled slightly last month, StatCan noted.
RBC economist Claire Fan called the September inflation report a “step in the right direction” for the Bank of Canada’s efforts to restore price stability.
The central bank has rapidly raised its benchmark interest rate by 4.75 percentage points since March 2022, but economists generally say it takes between a year and 18 months for the economy to fully absorb the impact of higher rates.
Fan said in a note to clients Tuesday that the lagged effect of higher rates will continue to put downward pressure on inflation, as consumers have to put more money aside to pay down debt and businesses are forced to rein in price hikes to stay competitive.
“With more easing in inflation readings expected in the months ahead, we expect the Bank of Canada to stay on pause through the rest of the year,” she wrote.
A pair of Bank of Canada surveys released on Monday also show that higher interest rates are starting to bite on businesses and consumers alike, pushing firms to scale down their sales forecasts in the year ahead.
Gross domestic product data also shows the Canadian economy has effectively stalled in recent months.
Benjamin Reitzes, BMO’s managing director of rates and macro strategist, said in a note on Tuesday that the cooling in the economy and signs of weakness in the Bank of Canada’s own surveys indicate that the central bank can remain on hold for the rest of this cycle and let the slowing trends play out to tamp down inflation.
“Given that inflation is the most lagging of indicators, and the economy is clearly weakening, we’re likely to see ongoing disinflationary pressure,” he said.
“There’s no need for further rate hikes in Canada.”
Money markets trimmed bets for a rate hike next week after the inflation data came out. They now see a 23 per cent chance for a rate increase next week, down from 43 per cent before the figures, according to Reuters.
Federal government doesn’t get ‘credit’ for inflation cooling: economist
Chrystia Freeland, Canada’s finance minister and deputy prime minister, said that Canadians struggling to keep up with the rising cost of living should be encouraged by progress on the inflation front.
“The trend is in the right direction, and that is good news for Canadians,” she told reporters on Tuesday. Freeland announced plans to push banks to expand offerings for low- and no-cost bank accounts to make financial services more affordable.
Industry Minister Francois-Philippe Champagne, speaking alongside Freeland on Tuesday, acknowledged that efforts to bring inflation back under control will take “weeks” or “months.”
“It’s not as if there’s an on-off switch here to inflation. We can’t just stabilize prices overnight,” he said in French.
The Liberal government has put grocery affordability at the top of its agenda in the House’s fall sitting, with Champagne putting pressure on grocers to come up with plans to stabilize food prices in recent weeks.
Heading into the Thanksgiving weekend, Champagne said he had secured guarantees from big grocers to implement price freezes and other plans to help control food prices, but there’s been little confirmation from the grocery chains themselves about any such actions.
The easing in food inflation can’t be attributed to the federal government ratcheting up pressure on big grocers, food economist von Massow told Global News. For one, much of the action has come in October, while the latest inflation data references September’s prices.
It’s also not clear that grocers themselves are a significant cause of food inflation, he noted, despite stores taking heat from consumers and politicians for raking in record profits amid the current inflationary period.
But von Massow also argued that with food inflation set to cool from last year’s highs, Ottawa is well-positioned to see grocery prices ease without having to take significant action.
More on Canada
“Some of these decreases we’ve seen in recent months are serendipitous for the federal government because it’ll ease some of the pressure,” he said. “But I don’t think the government gets a lot of credit.”
Champagne has pointed to the Liberals’ proposed Bill C-56, which includes new powers for the Competition Bureau to probe businesses and other measures to promote competition in the grocery sector, as a long-term strategy to limit inflation facing Canadians.
Von Massow said Tuesday that giving additional investigation powers to the Competition Bureau could help to provide “some clarity” into the role grocers play in food inflation.
VANCOUVER – Contract negotiations resume today in Vancouver in a labour dispute that has paralyzed container cargo shipping at British Columbia’s ports since Monday.
The BC Maritime Employers Association and International Longshore and Warehouse Union Local 514 are scheduled to meet for the next three days in mediated talks to try to break a deadlock in negotiations.
The union, which represents more than 700 longshore supervisors at ports, including Vancouver, Prince Rupert and Nanaimo, has been without a contract since March last year.
The latest talks come after employers locked out workers in response to what it said was “strike activity” by union members.
The start of the lockout was then followed by several days of no engagement between the two parties, prompting federal Labour Minister Steven MacKinnon to speak with leaders on both sides, asking them to restart talks.
MacKinnon had said that the talks were “progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved” — a sentiment echoed by several business groups across Canada.
In a joint letter, more than 100 organizations, including the Canadian Chamber of Commerce, Business Council of Canada and associations representing industries from automotive and fertilizer to retail and mining, urged the government to do whatever it takes to end the work stoppage.
“While we acknowledge efforts to continue with mediation, parties have not been able to come to a negotiated agreement,” the letter says. “So, the federal government must take decisive action, using every tool at its disposal to resolve this dispute and limit the damage caused by this disruption.
“We simply cannot afford to once again put Canadian businesses at risk, which in turn puts Canadian livelihoods at risk.”
In the meantime, the union says it has filed a complaint to the Canada Industrial Relations Board against the employers, alleging the association threatened to pull existing conditions out of the last contract in direct contact with its members.
“The BCMEA is trying to undermine the union by attempting to turn members against its democratically elected leadership and bargaining committee — despite the fact that the BCMEA knows full well we received a 96 per cent mandate to take job action if needed,” union president Frank Morena said in a statement.
The employers have responded by calling the complaint “another meritless claim,” adding the final offer to the union that includes a 19.2 per cent wage increase over a four-year term remains on the table.
“The final offer has been on the table for over a week and represents a fair and balanced proposal for employees, and if accepted would end this dispute,” the employers’ statement says. “The offer does not require any concessions from the union.”
The union says the offer does not address the key issue of staffing requirement at the terminals as the port introduces more automation to cargo loading and unloading, which could potentially require fewer workers to operate than older systems.
The Port of Vancouver is the largest in Canada and has seen a number of labour disruptions, including two instances involving the rail and grain storage sectors earlier this year.
A 13-day strike by another group of workers at the port last year resulted in the disruption of a significant amount of shipping and trade.
This report by The Canadian Press was first published Nov. 9, 2024.
The Royal Canadian Legion says a new partnership with e-commerce giant Amazon is helping boost its veterans’ fund, and will hopefully expand its donor base in the digital world.
Since the Oct. 25 launch of its Amazon.ca storefront, the legion says it has received nearly 10,000 orders for poppies.
Online shoppers can order lapel poppies on Amazon in exchange for donations or buy items such as “We Remember” lawn signs, Remembrance Day pins and other accessories, with all proceeds going to the legion’s Poppy Trust Fund for Canadian veterans and their families.
Nujma Bond, the legion’s national spokesperson, said the organization sees this move as keeping up with modern purchasing habits.
“As the world around us evolves we have been looking at different ways to distribute poppies and to make it easier for people to access them,” she said in an interview.
“This is definitely a way to reach a wider number of Canadians of all ages. And certainly younger Canadians are much more active on the web, on social media in general, so we’re also engaging in that way.”
Al Plume, a member of a legion branch in Trenton, Ont., said the online store can also help with outreach to veterans who are far from home.
“For veterans that are overseas and are away, (or) can’t get to a store they can order them online, it’s Amazon.” Plume said.
Plume spent 35 years in the military with the Royal Engineers, and retired eight years ago. He said making sure veterans are looked after is his passion.
“I’ve seen the struggles that our veterans have had with Veterans Affairs … and that’s why I got involved, with making sure that the people get to them and help the veterans with their paperwork.”
But the message about the Amazon storefront didn’t appear to reach all of the legion’s locations, with volunteers at Branch 179 on Vancouver’s Commercial Drive saying they hadn’t heard about the online push.
Holly Paddon, the branch’s poppy campaign co-ordinator and bartender, said the Amazon partnership never came up in meetings with other legion volunteers and officials.
“I work at the legion, I work with the Vancouver poppy office and I go to the meetings for the Vancouver poppy campaign — which includes all the legions in Vancouver — and not once has this been mentioned,” she said.
Paddon said the initiative is a great idea, but she would like to have known more about it.
The legion also sells a larger collection of items at poppystore.ca.
This report by The Canadian Press was first published Nov. 9, 2024.
