Canadian inflation hits 30-year high as Omicron threat looms - The Globe and Mail | Canada News Media
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Canadian inflation hits 30-year high as Omicron threat looms – The Globe and Mail

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A man shops at Iqbal Halal grocery store, in Toronto, May 7.Christopher Katsarov/The Globe and Mail

Canadian inflation hit a three-decade high in November as the economy now deals with rapidly increasing infections tied to the Omicron variant of COVID-19, threatening to exacerbate supply disruptions that have pushed up prices and become a top concern for households.

The consumer price index (CPI) rose 4.7 per cent in November from a year earlier, matching October’s rate, which was the highest in 18 years, Statistics Canada said Wednesday. However, at the second decimal place, inflation of 4.72 per cent was the highest since September, 1991.

The result met expectations on Bay Street. Excluding gasoline, inflation held steady at 3.6 per cent. Prices rose in all eight major components of CPI, paced by transportation costs. Inflation has exceeded the Bank of Canada’s target range of 1 to 3 per cent since April.

Canada’s inflation explained: How the surge affects you and what you can do about changing prices

Nearly two years into the COVID-19 pandemic, inflation is perhaps the hottest topic of discussion – and debate – in the field of economics. The U.S. and Europe are similarly dealing with their loftiest price increases in decades, piling pressure on policy-makers to respond.

The Bank of Canada has long maintained that steeper inflation is largely driven by temporary factors related to COVID-19, such as supply-chain issues. However, bank officials have acknowledged that supply woes are dragging on longer than expected. Now, the Omicron variant – which has already led to travel restrictions – poses another threat to supply chains.

“Worries about Omicron have contributed to lower oil prices, but beyond that the restrictions on mobility necessary to fight the rapidly-spreading variant will do little to help on the inflation front and may exacerbate price pressures in some areas,” James Marple, senior economist at Toronto-Dominion Bank, wrote in a note to clients.

“Supply chain disruptions are likely to be prolonged. Demand may take a hit, but with people staying home, it will be redirected toward goods, keeping upward pressure on already-elevated prices.”

Wednesday’s report showed price pressures on a number of fronts. Notably, inflation has accelerated for groceries, reaching 4.7 per cent in November (from October’s 3.9 per cent). It was the largest annual increase since the outset of 2015. Prices for fresh or frozen beef rose 15.4 per cent, owing to drought conditions that made it more expensive to feed livestock.

Statscan on Wednesday noted that inflation is running higher than average wage growth, which means the purchasing power of Canadians has diminished.

As inflation persists, the messaging at central banks has shifted.

The Bank of Canada dropped a reference to inflationary pressures being temporary in last week’s rate decision, which kept its benchmark lending rate at 0.25 per cent. Similarly, U.S. Federal Reserve chair Jerome Powell recently said it was time to retire “transitory” as a description of high inflation, because it has “different meanings to different people.”

Regardless, the Bank of Canada still expects inflation to ease in 2022, ebbing to around 2 per cent by the end of the year. It has signalled rate hikes could start as early as April.

Bank officials have said they’re watching for signs that lofty inflation becomes entrenched.

“If supply disruptions and related cost pressures persist for longer than expected and strong goods demand continues, this would increase the likelihood of inflation remaining above our control range,” deputy governor Toni Gravelle explained in a speech last week.

“This could feed into inflation expectations and contribute to wage pressures, leading to a second round of price increases,” he added.

Mr. Gravelle was alluding to a wage-price spiral. In that scenario, workers demand higher wages to counteract price increases. Faced with higher labour costs, companies raise prices to protect their margins. Then, workers push for higher wages again, creating a vicious cycle.

Despite those concerns, bank officials say inflation expectations aren’t troubling over the mid- to long-term, based on surveys of businesses and consumers.

There are, however, signs of pressure in the short term. Small businesses plan to raise prices by an average of 4.3 per cent over the next year, the highest in more than a decade of records, according to survey results from the Canadian Federation of Independent Business. Nearly one-third of companies are planning to hike prices by 6 per cent or more.

Canada’s inflation rate hit 4.4 per cent in September. Personal finance columnist Rob Carrick answers questions about some of the factors driving inflation and how people can reduce its impact on their household budget.

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Roots sees room for expansion in activewear, reports $5.2M Q2 loss and sales drop

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September 13, 2024

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TORONTO – Roots Corp. may have built its brand on all things comfy and cosy, but its CEO says activewear is now “really becoming a core part” of the brand.

The category, which at Roots spans leggings, tracksuits, sports bras and bike shorts, has seen such sustained double-digit growth that Meghan Roach plans to make it a key part of the business’ future.

“It’s an area … you will see us continue to expand upon,” she told analysts on a Friday call.

The Toronto-based retailer’s push into activewear has taken shape over many years and included several turns as the official designer and supplier of Team Canada’s Olympic uniform.

But consumers have had plenty of choice when it comes to workout gear and other apparel suited to their sporting needs. On top of the slew of athletic brands like Nike and Adidas, shoppers have also gravitated toward Lululemon Athletica Inc., Alo and Vuori, ramping up competition in the activewear category.

Roach feels Roots’ toehold in the category stems from the fit, feel and following its merchandise has cultivated.

“Our product really resonates with (shoppers) because you can wear it through multiple different use cases and occasions,” she said.

“We’ve been seeing customers come back again and again for some of these core products in our activewear collection.”

Her remarks came the same day as Roots revealed it lost $5.2 million in its latest quarter compared with a loss of $5.3 million in the same quarter last year.

The company said the second-quarter loss amounted to 13 cents per diluted share for the quarter ended Aug. 3, the same as a year earlier.

In presenting the results, Roach reminded analysts that the first half of the year is usually “seasonally small,” representing just 30 per cent of the company’s annual sales.

Sales for the second quarter totalled $47.7 million, down from $49.4 million in the same quarter last year.

The move lower came as direct-to-consumer sales amounted to $36.4 million, down from $37.1 million a year earlier, as comparable sales edged down 0.2 per cent.

The numbers reflect the fact that Roots continued to grapple with inventory challenges in the company’s Cooper fleece line that first cropped up in its previous quarter.

Roots recently began to use artificial intelligence to assist with daily inventory replenishments and said more tools helping with allocation will go live in the next quarter.

Beyond that time period, the company intends to keep exploring AI and renovate more of its stores.

It will also re-evaluate its design ranks.

Roots announced Friday that chief product officer Karuna Scheinfeld has stepped down.

Rather than fill the role, the company plans to hire senior level design talent with international experience in the outdoor and activewear sectors who will take on tasks previously done by the chief product officer.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:ROOT)

The Canadian Press. All rights reserved.

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Talks on today over HandyDART strike affecting vulnerable people in Metro Vancouver

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September 12, 2024

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VANCOUVER – Mediated talks between the union representing HandyDART workers in Metro Vancouver and its employer, Transdev, are set to resume today as a strike that has stopped most services drags into a second week.

No timeline has been set for the length of the negotiations, but Joe McCann, president of the Amalgamated Transit Union Local 1724, says they are willing to stay there as long as it takes, even if talks drag on all night.

About 600 employees of the door-to-door transit service for people unable to navigate the conventional transit system have been on strike since last Tuesday, pausing service for all but essential medical trips.

Hundreds of drivers rallied outside TransLink’s head office earlier this week, calling for the transportation provider to intervene in the dispute with Transdev, which was contracted to oversee HandyDART service.

Transdev said earlier this week that it will provide a reply to the union’s latest proposal on Thursday.

A statement from the company said it “strongly believes” that their employees deserve fair wages, and that a fair contract “must balance the needs of their employees, clients and taxpayers.”

This report by The Canadian Press was first published Sept. 12, 2024.

The Canadian Press. All rights reserved.

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Transat AT reports $39.9M Q3 loss compared with $57.3M profit a year earlier

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September 12, 2024

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MONTREAL – Travel company Transat AT Inc. reported a loss in its latest quarter compared with a profit a year earlier as its revenue edged lower.

The parent company of Air Transat says it lost $39.9 million or $1.03 per diluted share in its quarter ended July 31.

The result compared with a profit of $57.3 million or $1.49 per diluted share a year earlier.

Revenue in what was the company’s third quarter totalled $736.2 million, down from $746.3 million in the same quarter last year.

On an adjusted basis, Transat says it lost $1.10 per share in its latest quarter compared with an adjusted profit of $1.10 per share a year earlier.

Transat chief executive Annick Guérard says demand for leisure travel remains healthy, as evidenced by higher traffic, but consumers are increasingly price conscious given the current economic uncertainty.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:TRZ)

The Canadian Press. All rights reserved.

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