Canada’s inflation rate likely took another dip last month, but with many Canadians still struggling with the cost of living, the federal government is facing pressure to deliver more help in the upcoming budget.
Statistics Canada is set to release its February consumer price index report on Tuesday, giving its most up-to-date reading on inflation ahead of the federal government’s budget on March 28.
Desjardins and RBC are both forecasting the inflation rate fell to 5.4 per cent last month, down from 5.9 per cent in January.
But even as inflation eases, the federal government has signalled the budget will include affordability measures to help Canadians still challenged by the cost-of-living.
Desjardins’ chief economist Jimmy Jean said all eyes are on Ottawa to balance affordability priorities with fiscal restraint.
“One of the things we obviously are going to watch is what governments put forward to help with cost of living, all with the constraint that it must not add fuel to the fire (of inflation),” Jean said.
The Bank of Canada has been laser-focused on bringing inflation back down to its two per cent target. Its aggressive rate hike cycle over the last year is starting to slow the economy by forcing people and businesses to pull back on spending.
As the economy slows, economists worry excessive or untargeted measures by the federal government could work against the central bank’s efforts and force it to raise interest rates even higher.
Finance Minister Chrystia Freeland has said repeatedly that she’s committed to fiscal restraint and ensuring the federal government doesn’t make the Bank of Canada’s job harder.
But the Liberals are also facing pressure from New Democrats to continue providing support for low-income Canadians who are hardest hit by inflation.
NDP Leader Jagmeet Singh said he wants to see the government extend the six-month boost to the GST rebate, introduced last fall, which temporarily doubled the amount people received.
At a news conference Wednesday, Prime Minister Justin Trudeau didn’t weigh in on whether his government would extend the rebate, but said the budget will include affordability measures.
“In our budget, we are going to be putting forward measures that will directly help Canadians,” Trudeau said.
Inflation has become a top political and economic concern in the country after a significant runup in prices last year, driven in part by the Russian invasion of Ukraine and mangled supply chains.
But since peaking at 8.1 per cent last summer, Canada’s inflation rate has been steadily declining as global pressures on inflation ease and high interest rates weigh on the economy.
Jean said lower gas prices last month likely drove the headline inflation rate down further. Other components of the CPI, like food prices, probably didn’t ease by much.
Grocery prices in January were a staggering 11.4 per cent higher than they were a year ago.
RBC economist Carrie Freestone said businesses, including grocers, have been able to pass on the extra costs they’re facing from suppliers to consumers. But grocery prices are still expected to ease as lower agricultural commodity prices feed through the supply chain.
“It’s just seems to be taking a bit of time,” she said.
The Bank of Canada is currently holding its key interest rate steady at 4.5 per cent, hoping inflation will ease without the need for more rate hikes. It’s forecasting inflation will fall to about three per cent by mid-year.
“As long as inflation continues to trend lower as we expect … (the Bank of Canada) will probably stay on the sidelines,” Freestone said.For workers who haven’t seen their wages keep up with inflation, the rapid rise has been especially punishing. But as inflation slows, the gap between the two is narrowing.
In February, average hourly wages were up 5.4 per cent, matching forecasts for inflation.
The Bank of Canada has said persistently strong wage growth will make getting back to the two per cent inflation target difficult.
For workers, Jean said the narrowing gap between inflation and wage growth is good news, but doesn’t make up for what they’ve lost.
“We’re not talking about making up for the last two years of wage growth not keeping up with inflation,” Jean said. “We’re just stopping the hemorrhage here.”
HALIFAX – Ottawa is negotiating a $500-million bailout for Nova Scotia’s privately owned electric utility, saying the money will be used to prevent a big spike in electricity rates.
Federal Natural Resources Minister Jonathan Wilkinson made the announcement today in Halifax, saying Nova Scotia Power Inc. needs the money to cover higher costs resulting from the delayed delivery of electricity from the Muskrat Falls hydroelectric plant in Labrador.
Wilkinson says that without the money, the subsidiary of Emera Inc. would have had to increase rates by 19 per cent over “the short term.”
Nova Scotia Power CEO Peter Gregg says the deal, once approved by the province’s energy regulator, will keep rate increases limited “to be around the rate of inflation,” as costs are spread over a number of years.
The utility helped pay for construction of an underwater transmission link between Newfoundland and Nova Scotia, but the Muskrat Falls project has not been consistent in delivering electricity over the past five years.
Those delays forced Nova Scotia Power to spend more on generating its own electricity.
This report by The Canadian Press was first published Sept. 16, 2024.
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.
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.
