Canada’s annual inflation rate slowed to 2.9 per cent in January, mostly due to a deceleration in the price of gas, Statistics Canada said Tuesday.
Economists were expecting the rate to come in at 3.3 per cent.
Gas prices fell four per cent year over year in January after driving headline inflation up to 3.4 per cent in December, due to what economists call a base-year effect (the impact of comparing prices in a given month to the same month a year earlier).
The core inflation rate, which strips away gasoline and other volatile sectors, was 3.2 per cent.
However, mortgage interest costs continued to be the No. 1 driver of inflation, at a year-over-year rate of 27.4 per cent, while rent price growth ticked up to 7.9 per cent.
“Housing is certainly the biggest part of most people’s budget and of inflation overall,” said Tu Nguyen, an economist with RSM Canada. “We have seen prices for both renters and homeowners go up significantly over the past year.”
Bank of Canada governor Tiff Macklem has addressed the high cost of housing several times recently.
“Housing affordability is a significant problem in Canada but not one that can be fixed by raising or lowering interest rates,” he said in a speech earlier this month.
“It seems like no matter what the bank does, housing prices will continue to go up,” Nguyen said. “If they continue holding, that means higher mortgage interest payments for homeowners who are going to be renewing in the upcoming months.
“If they begin cutting, of course the prospective buyers who have been sitting on the sidelines are going to jump back in, causing prices to go up overall,” she continued, adding that rent prices will continue to go up amid population growth and a housing shortage.
Economists still expecting first rate cut in June
“It’s a much milder reading than expected, especially given the high-side surprise seen in last week’s round of U.S. inflation reports,” wrote Douglas Porter, chief economist at Bank of Montreal, in a note.
“Importantly, January can set the tone for inflation, since firms often take the opportunity to adjust prices for the year in this month — and there was little sign of a big January bump this year,” he added.
The Bank of Canada’s efforts to cool inflation have been ongoing since it first raised its key interest rate in March 2022. The central bank’s goal is to bring inflation down to its two per cent target.
Canadian inflation slows to 2.9% in January, down from 3.4%
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Duration 2:47
Canada’s annual inflation rate slowed to 2.9 per cent in January, mostly due to a deceleration in the price of gas, according to data from Statistics Canada. The inflation rate was 3.4 per cent in December.
Since then, the Bank of Canada has raised the interest rate 10 times, though it has held the rate steady at five per cent since July. Economists expect the bank will start cutting rates this summer.
The Bank of Canada will likely remain cautious as wage growth and the cost of services remained firm in January, and because core inflation is still above three per cent, Porter said.
“But clearly today’s result makes rate cuts much more plausible in coming months, and we remain comfortable with our call that the Bank [of Canada] will begin trimming [interest rates] in June,” he wrote.
Grocery prices rising at slower pace
While groceries are still getting more expensive, prices grew at a slower rate in January, StatsCan said. (Bryan Eneas/CBC)
“Another piece of good news was the decline in groceries and that decline in grocery price growth,” said Nguyen.
The consumer price index report showed that while groceries are still getting more expensive, prices grew at a slower rate in January.
Meat, dairy products, fresh fruit and baked goods were among the basket items that helped bring the food inflation rate down to 3.4 per cent, while the price of soup, bacon, shrimps and prawns declined in January.
Consumers also paid much less for airfare — typical of January, as the holiday rush subsides. But they paid more for cell services month over month, as price promotions from the fall months ended.
“I think that consumer spending, even in services, is going to slow in the future because there’s just not as much buffer in people’s budget[s] now to cut,” said Nguyen.
TOKYO (AP) — Japanese technology group SoftBank swung back to profitability in the July-September quarter, boosted by positive results in its Vision Fund investments.
Tokyo-based SoftBank Group Corp. reported Tuesday a fiscal second quarter profit of nearly 1.18 trillion yen ($7.7 billion), compared with a 931 billion yen loss in the year-earlier period.
Quarterly sales edged up about 6% to nearly 1.77 trillion yen ($11.5 billion).
SoftBank credited income from royalties and licensing related to its holdings in Arm, a computer chip-designing company, whose business spans smartphones, data centers, networking equipment, automotive, consumer electronic devices, and AI applications.
The results were also helped by the absence of losses related to SoftBank’s investment in office-space sharing venture WeWork, which hit the previous fiscal year.
WeWork, which filed for Chapter 11 bankruptcy protection in 2023, emerged from Chapter 11 in June.
SoftBank has benefitted in recent months from rising share prices in some investment, such as U.S.-based e-commerce company Coupang, Chinese mobility provider DiDi Global and Bytedance, the Chinese developer of TikTok.
SoftBank’s financial results tend to swing wildly, partly because of its sprawling investment portfolio that includes search engine Yahoo, Chinese retailer Alibaba, and artificial intelligence company Nvidia.
SoftBank makes investments in a variety of companies that it groups together in a series of Vision Funds.
The company’s founder, Masayoshi Son, is a pioneer in technology investment in Japan. SoftBank Group does not give earnings forecasts.
Shopify Inc. executives brushed off concerns that incoming U.S. President Donald Trump will be a major detriment to many of the company’s merchants.
“There’s nothing in what we’ve heard from Trump, nor would there have been anything from (Democratic candidate) Kamala (Harris), which we think impacts the overall state of new business formation and entrepreneurship,” Shopify’s chief financial officer Jeff Hoffmeister told analysts on a call Tuesday.
“We still feel really good about all the merchants out there, all the entrepreneurs that want to start new businesses and that’s obviously not going to change with the administration.”
Hoffmeister’s comments come a week after Trump, a Republican businessman, trounced Harris in an election that will soon return him to the Oval Office.
On the campaign trail, he threatened to impose tariffs of 60 per cent on imports from China and roughly 10 per cent to 20 per cent on goods from all other countries.
If the president-elect makes good on the promise, many worry the cost of operating will soar for companies, including customers of Shopify, which sells e-commerce software to small businesses but also brands as big as Kylie Cosmetics and Victoria’s Secret.
These merchants may feel they have no choice but to pass on the increases to customers, perhaps sparking more inflation.
If Trump’s tariffs do come to fruition, Shopify’s president Harley Finkelstein pointed out China is “not a huge area” for Shopify.
However, “we can’t anticipate what every presidential administration is going to do,” he cautioned.
He likened the uncertainty facing the business community to the COVID-19 pandemic where Shopify had to help companies migrate online.
“Our job is no matter what comes the way of our merchants, we provide them with tools and service and support for them to navigate it really well,” he said.
Finkelstein was questioned about the forthcoming U.S. leadership change on a call meant to delve into Shopify’s latest earnings, which sent shares soaring 27 per cent to $158.63 shortly after Tuesday’s market open.
The Ottawa-based company, which keeps its books in U.S. dollars, reported US$828 million in net income for its third quarter, up from US$718 million in the same quarter last year, as its revenue rose 26 per cent.
Revenue for the period ended Sept. 30 totalled US$2.16 billion, up from US$1.71 billion a year earlier.
Subscription solutions revenue reached US$610 million, up from US$486 million in the same quarter last year.
Merchant solutions revenue amounted to US$1.55 billion, up from US$1.23 billion.
Shopify’s net income excluding the impact of equity investments totalled US$344 million for the quarter, up from US$173 million in the same quarter last year.
Daniel Chan, a TD Cowen analyst, said the results show Shopify has a leadership position in the e-commerce world and “a continued ability to gain market share.”
In its outlook for its fourth quarter of 2024, the company said it expects revenue to grow at a mid-to-high-twenties percentage rate on a year-over-year basis.
“Q4 guidance suggests Shopify will finish the year strong, with better-than-expected revenue growth and operating margin,” Chan pointed out in a note to investors.
This report by The Canadian Press was first published Nov. 12, 2024.
TORONTO – RioCan Real Estate Investment Trust says it has cut almost 10 per cent of its staff as it deals with a slowdown in the condo market and overall pushes for greater efficiency.
The company says the cuts, which amount to around 60 employees based on its last annual filing, will mean about $9 million in restructuring charges and should translate to about $8 million in annualized cash savings.
The job cuts come as RioCan and others scale back condo development plans as the market softens, but chief executive Jonathan Gitlin says the reductions were from a companywide efficiency effort.
RioCan says it doesn’t plan to start any new construction of mixed-use properties this year and well into 2025 as it adjusts to the shifting market demand.
The company reported a net income of $96.9 million in the third quarter, up from a loss of $73.5 million last year, as it saw a $159 million boost from a favourable change in the fair value of investment properties.
RioCan reported what it says is a record-breaking 97.8 per cent occupancy rate in the quarter including retail committed occupancy of 98.6 per cent.
This report by The Canadian Press was first published Nov. 12, 2024.
