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Canada’s inflation rate now at 7.7%

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Canadian annual inflation rate

Canada’s inflation rate rose at its fastest pace in almost 40 years in the year up to May, as the price of just about everything continues to go up fast.

Statistics Canada reported Wednesday that an uptick in the price of gasoline was a major factor causing the overall inflation rate to hit 7.7 percent. Gas prices rose by 12 percent in the month of May alone, and are up by 48 percent compared to where they were a year ago.

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Food prices were also a major factor to the upside, with grocery bills increasing by 9.7 per cent over the past year. Within the food category, the cost of edible fats and oils skyrocketed 30 per cent, the fastest increase on record.

Russia’s invasion of Ukraine is a major factor in that uptick, as Ukraine is one of the world’s leading suppliers of sunflower oil, and the war has caused shortages of the pantry staple.

 

 

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Food researchers say a shortage of sunflower oil triggered by the war in Ukraine will only get worse.

The cost of home furnishings are also rising at a record-setting clip, with furniture prices increasing by 15.8 per cent in the past year, mostly due to higher input and shipping costs. A major factor in that increase was the start of tariffs of up to 300 per cent on some upholstered furniture from Vietnam and China starting last year, CBC News has reported.

Higher increase than expected

Economists has been expecting the rate to increase from a 30-year high of 6.8 per cent in April, but the numbers for May blew past those expectations. Prices increased by 1.4 per cent in the month of May alone. Seasonally adjusted, that makes May 2022 the biggest one-month jump in the inflation rate in 30 years.

“If you aren’t over 40, you have never lived through inflation like this, and unfortunately, we are not expecting much of a reprieve going forward,” TD Bank economist Leslie Preston said. “Inflation is expected to remain elevated through 2022.”

The inflation rate rose in every province, from a low of 7 per cent in Saskatchewan, to an eye-watering 11.1 per cent in Prince Edward Island.

The price of food purchased at grocery stores has risen by 9.7 per cent in the past year, Statistics Canada says. (Ivanoh Demers/Radio-Canada)

Consumers are feeling the pinch. Laura-Marie Paynter, a single mother from Toronto, recently got a second job to bring in some extra income for herself and her teenaged daughter, but she’s discovered that jobs has actually added to her costs in the form of having to pay more for transportation, and having to order food because she’s not at home to cook as much.

“It’s frustrating that I have to take time away from my home and my child in order to keep things in our fridge and a roof over our head,” she told the CBC in an interview.

Canada is not the only country dealing with inflation at its highest level in decades. In the U.S., the inflation rate tops 8 per cent right now, and new data out of the U.K. shows the cost of living rising at a 9 per cent annual clip.

While Canada’s inflation rate is going up swiftly any way you slice it, Statistics Canada made some changes recently to how it tabulates the numbers, giving increased weight to things like shelter, and adding the cost of new and used vehicles to its official index for the first time.

By the data agency’s calculations, the cost of purchasing a passenger vehicle increased by 6.8 per cent in the past year. While that’s lower than the overall inflation rate, it was nonetheless one of the major factors contributing to the higher overall increase, Statscan said.

Bank of Canada now more likely to hike lending rates

The higher-than-expected inflation figure makes it all but certain that the Bank of Canada will raise its benchmark interest rate by three quarters of a percentage point at its next policy meeting in July, in an attempt to rein in runaway price increases.

The central bank slashed its lending rate to 0.25 per cent early in 2020 to stimulate the economy through the pandemic, but in recent months, it has moved aggressively to hike rates. Another 75-point hike would bring the bank’s key lending rate to 2.25 per cent, the highest its been since the financial crisis in 2008.

While higher borrowing costs are likely to bring down inflation over time, the impact is unlikely to be swift, economist Kiefer Van Mulligen with the Canadian Chamber of Commerce said, which is why consumers and policymakers should brace for high prices to stick around.

“Interest rates began to increase in March, but monetary policy does not work overnight,” he said. “[And] higher interest rates can’t do much to solve some of the more critical causes of current inflation, such as supply chain problems.”

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Tesla to shut down production at Gigafactory Berlin to upgrade the factory and add a shift – Electrek.co

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Tesla is reportedly going to shut down production at Gigafactory Berlin in order to upgrade the factory and add a shift to achieve higher production capacity.

The top priority at Tesla is to ramp up production to catch up with customer demand.

The automaker is doing that at all its factories, but the ramps are more significant at Gigafactory Berlin and Gigafactory Texas, which only recently started production.

Giga Berlin appeared to be doing relatively well thanks to utilizing the 2170 cells, which enables a battery infrastructure that Tesla is used to, and it achieved a production rate of 1,000 Model vehicles per week in June.

Giga Texas appeared to be falling behind since it had difficulties ramping up production of the 4680 battery cell and structural battery pack, but we reported that last week that the factory ramped up production significantly with Tesla starting to build Model Y Long Range with 2170 cells at the plant.

Now Tesla is looking for Gigafactory Berlin to catch up, and it will reportedly shut down the factory for about two weeks in order to upgrade it.

Germany’s Bild reported the news today:

According to BILD information, Tesla therefore wants to interrupt operations for two weeks starting next Monday. It is unclear how many of the 4,500 employees will be sent on vacation and how many technicians will remain to convert production.

The publication also says that the automaker will add a third shift and start producing electric motors at the factory instead of importing them from Gigafactory Shanghai:

According to employees, after the break in production, work should be carried out in three instead of two shifts. In addition, Tesla could then start manufacturing the drive in a neighboring hall.

While the upgrade could help, Gigafactory Berlin’s biggest bottleneck is reportedly its workforce.

Over the last few months, there have been many reports of Tesla having issues hiring and retaining employees. Some of them suggested that salaries have been a particular issue and the local union, IG Metall, was starting to get involved. But Tesla did increase salaries by 6% for many employees in order to address the concern.

It will require a significant hiring effort for Tesla to add a third shift at the plant after the factory restart later this month.


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Travel delays: Canadian airlines, airports top global list – CTV News

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MONTREAL –

Canadian airlines and airports claimed top spots in flight delays over the July long weekend, notching more than nearly any other around the world.

Air Canada ranked No. 1 in delays on Saturday and Sunday that affected 700-plus trips in total, or about two-thirds of its flights, according to tracking service FlightAware. It was more than 14 percentage points above the three carriers tied for second place.

Jazz Aviation – a Halifax-based company that provides regional service for Air Canada – and the lower-cost Air Canada Rouge both saw 53 per cent of flights delayed, putting them in the No. 2 spot alongside Greek regional airline Olympic Air.

On Saturday, WestJet and budget subsidiary Swoop placed third and fourth at 55 per cent.

On the airport front, Toronto’s Pearson claimed the No. 2 spot Sunday after 53 per cent of departures were held up, below only Guangzhou’s main airport in China. Pearson beat out Charles de Gaulle airport in Paris and Frankfurt Airport in Germany.

Montreal’s airport placed sixth Sunday at 43 per cent of takeoffs delayed, on par with London’s Heathrow, according to FlightAware figures.

Air Canada said last week it will cut more than 15 per cent of its summer schedule, nearly 10,000 flights in July and August, as the country’s aviation network sags under an overwhelming travel resurgence.

Bookended by statutory holidays in Canada and the U.S., the weekend saw scenes of long lines and luggage labyrinths flood social media as airports across the globe grappled with the start of peak travel season following two years of pent-up demand.

Passenger flow at Canadian airports is already at 2019 levels during peak times, though closer to 80 per cent of pre-pandemic volumes overall, experts say.

“This is going to be with us all summer,” said Helane Becker, an airline analyst for investment firm Cowen.

“Almost every airline encouraged people to retire early or take leaves. And those people that retired early maybe don’t want to come back to work,” she saidof airline employees.

“It’s hard to rebuild off those lows.”

Some pilots have not yet had their licences renewed, while positions with groundcrews and baggage handling remain unfilled – or quickly vacated – due to low wages and stressful work conditions, unions say.

Government agencies have been on a hiring spree for airport security and customs, with 900-plus new security screeners in place since April – though not all have clearance to work the scanners – according to the federal Transport Department.

“The airlines also used the pandemic to eliminate aircraft types from their fleet, and to ground and retire their oldest aircraft. It’s hard to bring these aircraft back once you park them without doing a lot of maintenance,” Becker added.

“As demand continues to surge, we’re basically looking at an inability for the airlines to easily accommodate it. And I think that’s true worldwide.”

This report by The Canadian Press was first published July 4, 2022

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High inflation likely to stick around, consumers and businesses tell Bank of Canada in 2 surveys – CBC News

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Canadian businesses and consumers think the current era of high inflation will persist for longer than they’d previously hoped, according to two surveys from the Bank of Canada released Monday.

The two reports — known as the Business Outlook Survey and the Canadian Survey of Consumer Expectations — are the result of the central bank’s quarterly polling of Canadian businesses and consumers for their outlook on what’s happening on the ground in Canada’s economy.

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While the findings differed in a few ways, the dominant theme of both was inflation and the impact it is having on buying and selling, hiring and firing.

The main takeaway from the business survey was that most businesses are seeing higher sales than they were seeing earlier in the pandemic, as economic activity is returning to some sort of normal. But demand continues to outstrip supply across almost all types of businesses, which is both a factor of and a contributor to the high inflation currently plaguing the economy.

Nearly two-thirds of businesses told the central bank they are seeing labour shortages. Nearly half — 43 per cent — say they are experiencing bottlenecks in their supply chains, and they’re taking longer to resolve than previously anticipated.

Businesses expect Canada’s inflation rate to still be more than five per cent a year from now, and still more than four per cent two years out. But five years from now, the survey suggests they expect the inflation rate to come back to within the range the central bank targets, between one and three per cent.

It was a similar story on the consumer side. Long-term inflation expectations increased from 3.2 per cent to four per cent, while short-term expectations increased to 6.8 per cent, up from 5.1 per cent last quarter.

“Consumers clearly took notice of the recent [consumer price index] releases and the high prices for food and gasoline,” CIBC economists Andrew Grantham and Karyne Charbonneau said of the data. “Uncertainty around the evolution of inflation has increased.”

Wages set to increase

On the employment front, on average, business owners expect their labour costs to increase by 5.8 per cent this year. 

That’s significantly higher than the two per cent wage increases that consumers told the bank they were expecting.

“Workers do not anticipate their wage gains will keep up with inflation,” the bank said, adding that those in the private sector think their wages will increase this year by more than those in the public sector will.

Economist Leslie Preston with TD Bank said the survey shows just how big a concern inflation is in the minds of ordinary consumers.

“This survey suggests consumer spending in real terms is likely to slow in the coming months as wages can’t keep up with inflation, and households are already being forced to economize,” she said, adding that expectations of high inflation to come “is a source of concern for low-income consumers in particular, who are adjusting to high inflation by cutting spending, postponing major purchases, looking for discounts more often, and buying more affordable items.”

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