If there is anything we’ve learned over the past year it’s that central banks are pretty bad at predicting inflation. Which may be a reason for hope.
When Bank of Canada Senior Deputy Governor Carolyn Rogers warned on Wednesday — the same day Statistics Canada inflation data shocked nearly everyone with a jump to levels not seen since 1983 — that there is worse inflation ahead, she may or may not be right. After failing to foresee the current spurt of inflation, the bank’s record speaks for itself.
“We know inflation is keeping Canadians up at night. It’s keeping us up at night, and we will not rest easy until we get it back down to target,” said Rogers as part of a fireside chat organized by the Globe and Mail on one of the hottest days of the year so far.
That is why, she said, the Bank of Canada is raising rates “quite aggressively.”
WATCH | Businesses, consumers struggle to cope with inflation:
Consumers, businesses on edge as inflation hits 40-year high
12 hours ago
Duration 6:25
With inflation reaching a high not seen since 1983, Canadians are looking for ways to earn more and spend less, while businesses are trying to manage rising costs.
The end of inflation?
Rogers and the Bank of Canada are by no means alone in seeing a gloomy future where prices keep rising (“team transitory has disbanded,” quipped Rogers). But there are other voices, and it might just be time to look for signs of a bit of optimism, if just on the principle that it is always darkest before the dawn.
Because unless you are convinced that inflation is permanently out of control and the price of everything will keep rising forever, inflation must be ultimately transitory at some point. The question is: when is that point?
People shop in a Walmart Supercentre in Toronto on March 13, 2020. Canadian price increases hit highs not seen in four decades, but as central banks pour on rate hikes and begin to slow the economy, there are some signs inflation is losing its heat. (Carlos Osorio/Reuters)
A British rail strike and new data showing Canadians really are increasingly expecting inflation to persistare worrying indicators of what the future may hold.But just this week there have been counter-signals that some of the main drivers of inflation — food, oil and supply-chain disruptions — may be starting to heal themselves.
Meanwhile, though retail sales have not yet seen a strong impact from the rising cost of borrowing imposed by central bank rate hikes, Canadian real estate has — something Rogers observed from the heat of her imaginary fireside.
To look at the gloomy perspective first, the strike that shut down transport across Britain is a potential warning of the kinds of forces that could push wages, and therefore prices, higher.
Fighting for lost spending power
“Our campaign will run for as long as it needs to run,” Mick Lynch, secretary general of Britain’s Rail, Maritime and Transport Workers, said this week. With a management wage offer of three per cent amidst inflation above nine per cent, there are fears the transport strike could begin a new “summer of discontent,” as public sector unions, including the health sector, battle to regain lost spending power.
So far there are few signs of that kind of disruptive labour action in Canada, and governments may decide to try to placate workers before it gets that far. Federally regulated dairy farmers, for example, have been granted a mid-year price increase.
As Rogers reiterated on Wednesday, inflationary expectations, the conviction by workers and businesses that prices will keep going up, are one of the things central banks fear the most.
A recent report from the Conference Board of Canada offers some good news and bad news on that front. Fresh June data shows Canadian expectations for one year ahead “popped upward,” but three-year expectations declined, showing that many Canadians may still be on team transitory.
While core inflation rose again in the latest Statistics Canada data, there remain a few key products whose rising prices are benchmarks for our inflationary fears.
Prices at the pumps hit new highs when last month’s data was being collected, but gas-buyers know this month, prices, while still unpleasantly high, have dropped significantly so far, meaning other things being equal the inflation number could be lower next month.
An adjustment to the statistical agency’s basket of goods to include new and used vehicle prices while upping the weighting of housing was expected to result in a one-time increase that could fade away in future monthly data.
WATCH | Where is inflation hitting the hardest?:
Inflation rate now at 7.7% — its highest since 1983
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Canada’s inflation rate rose at its fastest pace in almost 40 years in the year up to May, says Statistics Canada, as the price of just about everything continues to go up fast.
Slowing not cheering
Some of the most encouraging data on prices came this week from food commodity analysts at Agritel, who showed the global price of grains and oil seeds have begun to fall, although one reason for the decline, fear of a recession, is not entirely cheering. It does show fast-paced rate hikes are having an impact.
Similarly, even as U.S. President Joe Biden promises to cut gas taxes, the price of oil has begun to slide. Despite a reluctance by consumers to drive less in the U.S. and in Canada, business users continue to look for efficiencies as rising interest rates and a declining economy threaten — even as oil producers look for new sources.
WATCH | Biden plans to freeze gas taxes to lower prices at the pump:
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U.S. President Joe Biden unveils a plan to lower gas prices.
Clarence Woudsma, author of Freight, land and local economic development and an associate professor at the University of Waterloo, notes that while fuel use by shippers rises faster than GDP when growth is picking up, the reverse can apply when the economy declines.
“Sometimes trucking statistics are referred to as a sort of a canary in the coal mine,” said Woudsma. “If we’re going into recession, businesses stop placing orders or they adjust their inventory because they see what’s coming in the next quarter.”
That may be even more true in the wake of the recent supply chain difficulties faced by North American businesses. Shortages encouraged companies to fill up their warehouses when they could. They must now try to unwind those excess inventories, inadvertently helping to unclog transportation capacity needed by other inputs still in short supply.
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.
