Canadian underlying inflation hit the highest in a decade in November, reinforcing a decision by policy makers this month to refrain from cutting interest rates despite concerns around slowing growth.
Inflation rose 2.2 per cent in November from a year earlier, compared with 1.9 per cent in October, on higher shelter and vehicle costs, Statistics Canada reported Wednesday. The annual reading matched economist expectations. On a monthly basis, the consumer price index fell 0.1 per cent, also matching forecasts.
Core inflation — seen as a better measure of underlying price pressure than the headline figure — increased 2.2 per cent, the highest reading since 2009, from 2.1 per cent in October.
Wednesday’s report bears out the view from the Bank of Canada, which said in its December rate statement that inflation would increase temporarily in the coming months, due to year over year movements in gasoline prices.
“Should gasoline prices remain stable, the headline inflation rate should also cool back down in the second quarter of next year, as the year-ago comparisons become a bit firmer,” Royce Mendes, an economist at Canadian Imperial Bank of Commerce, wrote in a note.
Canada’s currency rose on the report, appreciating 0.2 per cent to $1.3132 per U.S. dollar at 8:47 a.m. Toronto time.
- Canada’s CPI has grown at 1.9 per cent or more on an annual basis for nine straight months, backing the Bank of Canada’s stance to remain patient and leave rates unchanged
- Mortgage interest costs, driven by new lending, and higher prices for passenger vehicles were the largest contributors to the 12-month change in prices; telephone and internet access services were the main downward contributors
- Energy prices rose 1.5 per cent on an annual basis in November, on a weak comparison from a year earlier when gasoline prices were dropping due to the global supply glut
- Consumers paid 6.2 per cent more for fresh or frozen beef in November from a year earlier; the price gains follow disruptions to North American supply chains and strong international demand for Canadian beef
- Following the end of export bans on Canadians pork, consumers paid more on an annual basis for ham and bacon, fresh or frozen pork in November from the prior month
- On a monthly basis, passenger vehicles, fresh fruit and vegetables were the main upward contributors, while travel tours and traveler accommodation weighed on the downside, as package deals to holiday destinations became cheaper
- Goods inflation at 2.3 per cent is the highest since August 2018
US auto workers expand strike as Biden prepares to join picket line – Al Jazeera English
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Manufacturers say American autoworker strike could idle Canadian supplier plants
American autoworkers will strike at 38 more supplier plants as of noon Friday, the union representing workers announced, citing little progress in negotiations with two of the three Detroit automakers.
Shawn Fain, president of the United Auto Workers (UAW), said Ford had made progress on their offer, but that Stellantis and GM hadn’t — prompting him to call strikes at those companies’ supplier plants across 20 states.
Earlier this week, 13,000 workers at three facilities were striking General Motors, Ford and Stellantis. They are now on their eighth day of job action. Those strikes will continue, Fain said.
Progress by Ford included reinstating the cost of living allowance formula the union lost in 2009, an enhanced profit sharing formula and the immediate conversion of temporary employees with 90 days’ service upon ratification
The ongoing strike by autoworkers at automotive plants in the United States will idle manufacturing plants in Canada in a matter of days, according to industry experts.
Flavio Volpe is head of the Automotive Parts Manufacturers’ Association, which represents companies that build components for vehicles being built in North America.
He said companies let out a “sigh of relief” when the tentative deal between Unifor and Ford was announced.
But he said those companies are worried about the United Auto Workers threats to expand job action if General Motors, Ford and Stellantis do not make “serious progress” on the union’s contract demands.
Volpe said that if strike action at a Jeep production plant continues, parts makers in Canada will adjust their production schedules next week.
“Auto part companies, employers that I represent, will idle those plants,” said Volpe.
Timing tough for rebounding manufacturing sector
The North American auto industry operates on a just-in-time production schedule where the Detroit Three automakers buy parts from large tier-one supplier plants that source components for those parts from smaller, tier-two supplier plants.
A string of global crisis level events that includes the disruptive and deadly COVID-19 pandemic, as well as an on-going global microchip shortage, has put those smaller supplier plants in difficult financial positions.
That’s made the timing of the UAW strike difficult for tier-one and tier-two suppliers — “especially given the interruptions over the last three years and how thin everybody’s balance sheets have become,” said Volpe.
Dennis Darby represents thousands of companies responsible for more than 80 per cent of the Canadian manufacturing sector as president of the Canadian Manufacturers and Exporters Association (CME).
“This could not come at worse time,” he told CBC News.
Darby is in Washington, D.C., this week meeting with his North American counterparts and said the strike is top of mind.
He believes manufacturing companies he represents in Canada are bracing for impact, which he believes will hit in a matter of days.
“All the all the big companies obviously are affected, you know the big ones like Magna. But of course so are lots of secondary and tertiary suppliers that make components in the system,” said Darby.
He welcomed the news of a tentative agreement between Unifor and Ford that, if ratified by members, will prevent strike action that would shut down engine and assembly plants in Ontario.
Labour action shows cracks in the system
Automotive and supply chain expert Jan Giffiths believes that it’s the tier-two suppliers that are in a difficult position right now because of the pandemic disruptions, a tight labour market with increasing wages and the global microchip crisis.
“All of these things coming together is putting a tremendous amount of strain on the tier two supply base and now you throw a strike in on top of that? The dominoes are going to start to fall.”
Griffiths, who has decades of experience leading global tier one supply chain organizations and is the founder of Gravitas Detroit, said suppliers in the United States are already issuing layoff notices.
“If your customer stops sending you orders because they’re not building cars, then what what do you do? You have to conserve cash to survive,” said Griffiths, adding that would traditionally mean laying people off.
But there’s a high demand for skilled manufacturers in Canada and the United States, which may see companies look for creative ways to keep employees on the payroll instead of laying them off.
“That would be the last lever that you would pull because trying to bring qualified people back and go through a whole retraining and startup initiative is going to be extremely difficult,” said Griffiths.
Volpe said the companies he represents will also be looking at ways to keep people on staff.
“They will hang on tightly to employees there because of the incredibly tight labour market and the last thing anybody wants to do is lose good people and have to scour the market for new ones.”
Darby, who said the majority of manufacturers supplying the auto industry operate along the Highway 401 corridor in Ontario, believes affected suppliers will reduce hours or try to land other contracts.
“What we saw during COVID in the short run, people found ways to try to retain their folks even if it meant fewer hours because it’s a lot easier than trying to find a replacement.”
Canada Post reviewing use of address data following criticism from privacy watchdog
Canada Post says it is reviewing how it uses data for tailored marketing campaigns after the federal privacy watchdog found the post office was breaking the law by gleaning information from the outsides of envelopes and packages.
Privacy commissioner Philippe Dufresne said in a report released this week that information collected for the post office’s Smartmail Marketing Program includes data about where individuals live and what type of online shopping they do, based on who sends them packages.
The information is then used to help build marketing lists that Canada Post rents to businesses.
The commissioner found Canada Post had not obtained authorization from individuals to indirectly collect such personal information, a violation of Section 5 of the Privacy Act.
In a statement today, Canada Post says it is committed to the privacy law and the protections it places on personal information, and will therefore review its data services program.
The post office says it understands the public might have concerns and that it will live up to the standards that Canadians expect.
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