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Food prices skyrocket in Alberta

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Canada’s latest reading on inflation came in hotter than expected as the cost of groceries continued to climb at the fastest pace in decades, setting the stage for another sizeable interest rate hike next week.

In its latest consumer price index report, Statistics Canada said the country’s annual inflation rate in September dropped slightly to 6.9 per cent from seven per cent in August.

In Alberta, consumer price growth increased 0.2 per cent to 6.2 per cent in September from August. Core inflation bumped up from 4.9 per cent to 5.3 per cent.

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But groceries and food are starting to skyrocket. Alberta saw a 9.2 per cent increase and housing costs were up 6.2 per cent.

Nationally, grocery prices rose at the fastest rate since August 1981, with prices up 11.4 per cent compared with a year ago. That’s up from the previous month’s annual rate of 10.8 per cent and the 10th straight month food prices have outstripped the overall inflation rate.

Gas prices are starting to tumble, but are still 6.7 per cent higher compared to a year ago.

With underlying inflation pressures still sticky and the Bank of Canada signalling it isn’t backing away from interest rate hikes yet, BMO is forecasting the central bank will raise its key interest rate by three-quarters of a percentage point next Wednesday.

“Unfortunately, our forecast is they’ll continue to go up,” said Rob Roach, deputy chief economist with ATB Financial.

“So it’s going to get worse before it gets better.”

Looking to the economic outlook for 2023, however, Roach forecasts some parts of Canada may see a recession, but Alberta could keep its head above water.

“Alberta and Saskatchewan are both going to stand out, probably lead the country in GDP growth next year,” Roach said.

“Whereas nationally, if it’s not a recession for a quarter or two, it’ll be close. So we’re still going to feel that slowdown, especially households and individuals and businesses facing those higher costs and higher interest rates.”

The Bank of Canada is expected to deliver another interest rate increase next Wednesday, with forecasters split between a half and three-quarters of a percentage point hike.

The central bank, which has a mandate to maintain low and stable inflation, has been combating high inflation by raising interest rates. Since March, it has raised its key interest rate five times this year, bringing it from 0.25 to 3.25 per cent.

Still, the impact of higher interest rates is beginning to be felt in the housing market, which has been cooling after home prices reached a peak in February.

For homeowners or prospective buyers, higher interest rates are pushing up the cost of mortgage interest, while other costs rise at a slower pace.

Mortgage broker Keith Uthe with Demystifying Mortgages says what rate to lock in at or whether to test the variable rate depends on the person and their financial plans.

“There’s a lot of talk that we’re going into a recession,” he said.

“What will that recession look like, and will taking a shorter term be more beneficial to a family in their future wealth?”

As interest rates rise, however, Uthe says we still haven’t come close to numbers seen in 2008 and 2009.

“People that were in the market around that time are still going, ‘Well, you know, when I got my first mortgage, it was higher than this, so I’m okay,’” he said.

“People who have gotten a mortgage within the last five years and maybe only entered the homeowner market, they are the ones that are getting more of that shell-shock feeling.”

Uthe says for some, consolidating debt may be the best way through the financial pinch.

“Take into account their mortgage payments, their unsecured lines of credit, credit cards, car loans, student loans, and then put those all together and how rising interest rates are also impacting those,” he said.

With files from The Canadian Press 

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Keystone pipeline temporarily closed following Kansas oil spill

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The energy company in charge of the pipeline has not said what caused the spill or how much oil was released.

The Keystone pipeline has halted operations following an oil spill into a creek in the United States state of Kansas. The pipeline carries more than 600,000 barrels of oil from Canada to the Texas Gulf Coast each day.

Canada-based TC Energy said in a press release that it shut down the pipeline on Wednesday night in response to a drop in pipeline pressure. The company has yet to offer information on the scale and cause of the spill.

“The system remains shut down as our crews actively respond and work to contain and recover the oil,” the release said.

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The spill resulted in oil leaking into a creek in northeastern Kansas and the company has said they were using machinery to prevent the oil from moving further downstream. Pipelines have long spurred concerns about the destructive potential of oil spills.

Another pipeline previously proposed by TC, the Keystone XL pipeline, would have been 1,930 kilometres (1,200 miles) long and cut across US states such as Montana, South Dakota and Nebraska.

That proposal spurred strong opposition from advocates who said it would increase the chance of spills, undermine the rights of Indigenous communities and worsen climate change.

Former President Donald Trump approved a permit for the contentious project in 2017 but a court halted construction in 2018 before the permit was cancelled by President Joe Biden’s administration last year.

TC finally abandoned the effort in June 2021 but has since filed a claim seeking remuneration for losses it says it faced because of the cancellation.

The spill on Wednesday occurred several years after the Keystone pipeline leaked about 1.4m litres (383,000 gallons) of oil in eastern North Dakota in 2019.

As word of the shutdown spread on Wednesday, oil prices ticked upwards by about five percent.

“It’s something to keep an eye on, but not necessarily an immediate impact for now,” said Patrick De Haan, head of petroleum analysis at GasBuddy, which tracks gasoline prices, according to the Associated Press. “It could eventually impact oil supplies to refiners, which could be severe if it lasts more than a few days.”

In their statement, Keystone said their primary focus was the “health and safety of onsite staff and personnel, the surrounding community, and mitigating risk to the environment through the deployment of booms downstream as we work to contain and prevent further migration of the release”.

Previous Keystone spills have resulted in stoppages that lasted up to two weeks. However, analysts have noted that the current stoppage could possibly last longer because it involves a body of water.

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Bank of Canada policy will ‘hit home’ in 2023: David Rosenberg

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The Bank of Canada may be signalling a possible end to its months-long aggressive interest-rate hike cycle, but economist David Rosenberg said next year will see the lagging impact of 2022’s monetary policy “hit home” for Canadians.

“Next year is the payback,” Rosenberg, chief economist and strategist at Rosenberg Research and Associates Inc., said in an interview with BNN Bloomberg.

“2022 was the year of the sharp run-up in rates, 2023 will be the year where the policy lags from those rising rates hit home.”

He made the comments Thursday, a day after the Bank of Canada raised its overnight lending rate by 50 basis points to 4.25 per cent, as the central bank continued with its approach to bringing down inflation.

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Rosenberg predicted a “severe recession” for Canada next year based on the rate hike cycle, calling for a “triple whammy” with economic impacts compounded by high levels of household debt, a housing bubble and ripples in the global economy.

Possible spillover effects from the interest rate cycle could be felt, Rosenberg said, as banks may constrain the availability of credit and spending drops across various sectors.

Based on the latest rate increase, Rosenberg said he predicts at potentially one more rate hike from the bank before a pause. Once inflation starts to come down, Rosenberg said he thinks the central bank may start to cut rates, possibly in the second half of 2023.

“The next stage is going to be waiting for the inflation to come down, which I think it will, and the recession is going to catch a lot of people by surprise,” he said.

A similar pattern may play out in the U.S., but Rosenberg said Canadians are more exposed to higher interest rates through variable-rate mortgages and because more consumer credit is tied to short-term interest rates.

“As bad as it’s going to be in the U.S., and believe me, it’s not going to be a pretty picture there, I think the Canadian situation in the next year is going to be clouded at best,” he said.

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CRTC rejects Telus’ request to charge credit card processing fee for some services

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The Canadian Radio-television and Telecommunications Commission ruled Thursday that Telus is not able to charge a credit card processing fee for regulated home telephone services.

This ruling applies to Alberta and B.C. services that are regulated by the CRTC, which are generally home telephone services in certain smaller communities.

Since Oct. 6, most Canadian businesses, except in Quebec, can charge their customers a fee for credit card transactions, following a class-action lawsuit filed by retailers against Visa, MasterCard and card-issuing banks.

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Quebec is not included in this decision due to the province’s Consumer Protection Act, which prohibits the application of such surcharges.

On Aug. 8, Telus filed an application with the CRTC to introduce a credit card processing fee of 1.5 per cent, plus taxes, for payments made with a credit card.

On. Oct. 17, Telus began to charge the fee to clients paying by credit card in areas where services are not regulated by the CRTC, which includes its wireless and internet customers outside of Quebec.

Telus does not need to ask for the CRTC’s approval to add the surcharge to its unregulated services but the organization said it is “very concerned” about this practice as it goes against affordability and consumer interest.

“We heard Canadians loud and clear: close to 4,000 of you told us that you should not be subjected to an additional fee based on the method you choose to pay your bill,” Ian Scott, chairperson and CEO of the CRTC, said in a statement. “We expect the telecommunications industry to treat Canadians with respect and do better.”

The CRTC said, with this ruling, it is sending a “clear message” to Telus and other telecommunications service providers that are thinking of imposing a fee like this one on their customers.

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