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
23 hours ago
Duration 5:37
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:
Biden announces plan to freeze gas taxes
17 hours ago
Duration 11:50
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.
PALM BEACH, Fla. (AP) — Donald Trump is refusing to say how he voted on Florida’s abortion measure — and getting testy about it.
The former president was asked twice after casting his ballot in Palm Beach, Florida, on Tuesday about a question that the state’s voters are considering. If approved, it would prevent state lawmakers from passing any law that penalizes, prohibits, delays or restricts abortion until fetal viability — which doctors say is sometime after 21 weeks.
If it’s rejected, the state’s restrictive six-week abortion law would stand.
The first time he was asked, Trump avoided answering. He said instead of the issue that he did “a great job bringing it back to the states.” That was a reference to the former president having appointed three conservative justices to the U.S. Supreme Court who helped overturn the landmark Roe v. Wade decision in 2022.
Pressed a second time, Trump snapped at a reporter, saying “you should stop talking about it.”
Trump had previously indicated that he would back the measure — but then changed his mind and said he would vote against it.
In August, Trump said he thought Florida’s ban was a mistake, saying on Fox News Channel, “I think six weeks, you need more time.” But then he said, “at the same time, the Democrats are radical” while repeating false claims he has frequently made about late-term abortions.
In addition to Florida, voters in eight other states are deciding whether their state constitutions should guarantee a right to abortion, weighing ballot measures that are expected to spur turnout for a range of crucial races.
Passing certain amendments in Arizona, Missouri, Nebraska and South Dakota likely would lead to undoing bans or restrictions that currently block varying levels of abortion access to more than 7 million women of childbearing age who live in those states.
NEW YORK (AP) — In a new video posted early Election Day, Beyoncé channels Pamela Anderson in the television program “Baywatch” – red one-piece swimsuit and all – and asks viewers to vote.
In the two-and-a-half-minute clip, set to most of “Bodyguard,” a four-minute cut from her 2024 country album “Cowboy Carter,” Beyoncé cosplays as Anderson’s character before concluding with a simple message, written in white text: “Happy Beylloween,” followed by “Vote.”
At a rally for Donald Trump in Pittsburgh on Monday night, the former president spoke dismissively about Beyoncé’s appearance at a Kamala Harris rally in Houston in October, drawing boos for the megastar from his supporters.
“Beyoncé would come in. Everyone’s expecting a couple of songs. There were no songs. There was no happiness,” Trump said.
She did not perform — unlike in 2016, when she performed at a presidential campaign rally for Hillary Clinton in Cleveland – but she endorsed Harris and gave a moving speech, initially joined onstage by her Destiny’s Child bandmate Kelly Rowland.
“I’m not here as a celebrity, I’m not here as a politician. I’m here as a mother,” Beyoncé said.
“A mother who cares deeply about the world my children and all of our children live in, a world where we have the freedom to control our bodies, a world where we’re not divided,” she said at the rally in Houston, her hometown.
“Imagine our daughters growing up seeing what’s possible with no ceilings, no limitations,” she continued. “We must vote, and we need you.”
Harris used the song in July during her first official public appearance as a presidential candidate at her campaign headquarters in Delaware. That same month, Beyoncé’s mother, Tina Knowles, publicly endorsed Harris for president.
Beyoncé gave permission to Harris to use the song, a campaign official who was granted anonymity to discuss private campaign operations confirmed to The Associated Press.
Prime Minister Justin Trudeau, NDP Leader Jagmeet Singh and Green Party Leader Elizabeth May pay tribute to the life of Murray Sinclair, former judge, senator and chair of the Truth and Reconciliation Commission. Sinclair died November 4, 2024 at the age of 73. (Nov. 4, 2024)
