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Inflation in Canada soared 40 years ago. Is today’s price surge any different? – Global News

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Inflation in Canada continues to surge despite the Bank of Canada’s efforts to tamp down on price growth, with some economists and the central bank’s own governor expecting an even higher reading in the June report due Wednesday.

Inflation, which hit an annual rate of 7.7 per cent in May, has topped the Bank of Canada’s estimates through the first half of 2022.

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Tiff Macklem, who holds the top post at the central bank, told a group of business owners last week that inflation will likely top 8.0 per cent in due course. The Bank of Montreal (BMO) said in its updated inflation forecast earlier this week that it now expects inflation will average 8.3 per cent across the third quarter of the year.


Click to play video: 'What the latest interest rate hike means for your family’s bottom line'



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What the latest interest rate hike means for your family’s bottom line


What the latest interest rate hike means for your family’s bottom line

The higher the temperature rises on Canada’s inflation thermometer, the more Canadians of a certain age flash back to the 1970s and 80s, when annual inflation hit 12.5 per cent in 1981.

Back then, the Bank of Canada was forced to raise its benchmark interest rate to 21 per cent to get prices back under control, triggering the deepest economic contraction since the Great Depression.

Experts tell Global News there are some striking similarities between today’s inflation episode and the price pressures of 40 years ago — as well as a few key differentiators that could mean the difference between hitting a recession or achieving the “soft landing” the central bank is after.

Striking similarities

James Orlando, senior economist with TD Bank, first started tracking the similarities between today’s inflation period and the highs of the previous generation back in April.

Then, he noted that the causes of inflation today — surging food, fuel and shelter prices — were the same ones driving Canadian prices higher over two distinct periods, one in the early 1970s and one later in the decade, stretching into the 1980s.

“Current inflation is very much just like what happened back then,” he tells Global News.


Inflation surged in the 1970s and 80s, with many economists drawing similarities to today’s price pressures.


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The annual rate of inflation has steadily been rising throughout 2022.


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For instance, many economists point to Russia’s invasion of Ukraine and the spillover effects on oil and food supplies as a primary source of global inflation today.

In the 70s, the Yom Kippur war, followed a few years later by the Iranian Revolution and the Iran-Iraq War, also put immense pressure on the prices of oil.

Meat prices, meanwhile, skyrocketed 70 per cent in 1978, according to Orlando’s analysis, leading to higher costs in the deli aisle that would feel familiar to many Canadian households looking at their grocery bills today.


Click to play video: 'Inflation: Why the price of groceries are expected to rise'



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Inflation: Why the price of groceries are expected to rise


Inflation: Why the price of groceries are expected to rise

Orlando wrote back in April that while today’s price hikes might not be at the same magnitude as the 70s and 80s, it might feel just as significant. When inflation hits the staples we buy regularly in the grocery store, it elicits a more intense, emotional reaction from consumers, he explained.

But while prices were high, Canadians also were spending heavily through much of the 70s thanks to rapidly rising wages and low interest rates.

Ian Lee, associate professor in the Sprott School of Business, remembers working through that inflationary period at BMO, handling mortgages for the bank in 1980.

He says in the 70s, it made sense to borrow rather than invest and buy later, because interest rates were low and tomorrow’s prices were expected to outpace any returns on savings and investments.

Read more:

Bank of Canada interest rate hike is a ‘hammer to housing’ market: BMO economist

“Saving didn’t make any sense at all. So it created a real spend, spend, spend, borrow, borrow, borrow culture,” he tells Global News.

Lee said that many Canadians — himself included — put their money into homes. A run-up on housing prices as Canadians rushed into the market only fuelled inflation further.

Shelter has been a primary driver for today’s inflation episode as well, with rents now surging at the same time as rising interest rates make mortgages more expensive to carry.

Key differences

Lee says one of the most important differences between today’s inflation and that of the 70s is the tightness of the labour market.

The 1970s and 80s saw stagflation materialize — slowing economic growth and high unemployment with prices surging nonetheless.

Today’s unemployment rate sits at a record low of 4.9 per cent, on the other hand.

Macklem has pointed to the strong labour force readings as proof that the economy can take higher rate hikes, even as some economists warn layoffs will follow suit if the bank is too aggressive.


Click to play video: 'Too much, too soon? Experts say rapid interest rates are pushing Canada closer to a recession'



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Too much, too soon? Experts say rapid interest rates are pushing Canada closer to a recession


Too much, too soon? Experts say rapid interest rates are pushing Canada closer to a recession – Jul 6, 2022

Indeed, when the Bank of Canada had to raise its policy rate above the 20-per-cent mark in the 80s, following the U.S. Federal Reserve into the “war on inflation,” the economic pain was intense: the unemployment rate rose to 12 per cent in 1983.

Lee says the only reason interest rates had to go so high back then was that the Bank of Canada didn’t recognize the inflation crisis before it was too late — prices crept up over the course of more than a decade, compared to the sudden jump in just a few month’s time that we’re seeing today.

Central banks around the world did not chiefly use their policy rates to tackle inflation by that point in history. Canada was among the first to adopt inflation targeting as a mandate in 1991.

Though Lee believes the Bank of Canada again waited too long to address bubbling inflation, today’s reaction is years ahead of the 1980s response.

“The longer you postpone taking the medicine, the worse the problem gets. And the tougher the medicine becomes,” he says.

Read more:

Recession fears won’t faze Bank of Canada, economists say. Why that may be a good thing

Lee projects interest rates will not have to rise as high as they did 40 years ago and the Bank of Canada has reacted in time to skirt double-digit inflation figures.

Orlando says that so far, the Bank of Canada has maintained belief among Canadians and businesses that it will get inflation back to target — a critical tool in its own right to keep expectations in line and stop high inflation from becoming entrenched.

“The belief is still there. And I think the inflation target is a big contributor to that.”

Are we close to peak inflation?

In its forecast this week, BMO projected that inflation would peak in the third quarter of 2022, dropping to an average of eight per cent in the fourth quarter and following a steady decline through 2023.

Tu Nguyen, an economist with RSM Canada, tells Global News that there are signs inflation could peak this summer, but what determines that is largely outside the Bank of Canada’s purview.

Oil prices have shown signs of decline over the past month from their peaks this past spring, and the aggressive action taken by central banks around the world should dampen consumer demand and give supply chains time to catch up.

Read more:

U.S. inflation unexpectedly hits 9.1%, setting new 40-year high

But while global pressures have shown signs of easing, they can just as easily persist or even reverse course through the fall, Nguyen warned.

“There is still a war going on,” she said. “There’s a lot of instability, geopolitical tensions and a pandemic raging. And who knows what’s going to happen on the global stage over the next six months.”

— with files from Global News’ Anne Gaviola

© 2022 Global News, a division of Corus Entertainment Inc.

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Pakistan airline crew sought asylum in Canada: spokesperson – CTV News

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Typically, Pakistan International Airlines (PIA) flight attendants who arrive in Toronto stay at a hotel overnight, meet back up with their crew the next day and then fly to their next destination.

But increasingly often, PIA attendants aren’t showing up, the airline says. According to PIA, at least eight flight attendants disappeared over the last year and a half.

They have abandoned their jobs and are believed to have sought asylum in Canada, a spokesperson for the government-owned airline says.

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Increased occurrences

Abdullah Hafeez Khan said at least eight flight attendants “have gone missing” after flying to Pearson International Airport in Toronto. He said these incidents have been happening over the last 10 years, but are now occurring more frequently.

“Since probably October of 2022, the number of the people that have opted asylum has increased tremendously,” Khan said in a video interview with CTVNews.ca from Karachi, Pakistan, where the airline is based.

“None of those crew members that disappeared in the last one-and-a-half years have come back. So they were granted asylum for one way or the other, and that probably has encouraged others to do so.”

The missing employees were fired immediately and lost their company benefits, Khan said.

Why did they flee?

Khan said he could only speculate as to why the flight attendants would flee.

The Canadian government underscored the volatile situation in Pakistan, warning in a travel advisory of a “high threat of terrorism,” along with threats of civil unrest, sectarian violence and kidnapping.

“The security situation is fragile and unpredictable,” the Canadian travel advisory reads. “Incidents are typically attributed to extremism, ethnic divisions, sectarian strife, regional political disputes and the situation in neighbouring Afghanistan.”

It added that many deaths and injuries have occurred from bombings, shootings and other terrorist attacks at a wide range of targets.

Since Khan isn’t in contact with any of the missing employees, he says, he assumes they decided to seek asylum in Canada for economic and social reasons.

“So I naturally assumed that all of them have been given asylum because I don’t think they would be living there illegally,” he said, adding they may already have family connections in Canada who can support them.

In this June 8, 2013, photo, a Pakistan International Airlines plane moments before take off from the Benazir Bhutto airport in Islamabad, Pakistan. (AP Photo/Anjum Naveed)

‘PR crisis’

Khan called the flight attendants’ disappearances a “PR crisis” for PIA that is “bad” for business amid a crew shortage.

The airline is in talks with the Canada Border Services Agency (CBSA) and Pakistani law enforcement agencies to potentially create a “legal safeguard” to curtail flight crew from seeking asylum, he said.

When asked about the PIA flight attendants’ disappearances, Erin Kerbel, spokesperson for Immigration, Refugees and Citizenship Canada, said the department couldn’t comment on specific cases due to privacy legislation.

In response to questions about PIA’s claim that discussions are underway about the issue, a spokesperson for the CBSA said it could not confirm any information.

“The Canada Border Services Agency does not provide comment or details on specific individuals, including any discussions that would take place with airline companies, as an individual’s border and immigration information is considered private and protected by the Privacy Act,” Maria Ladouceur said in an email to CTVNews.ca.

Since the crew members’ disappearances, Khan said, the airline has “done numerous things to curtail that.”

For instance, the airline is only staffing Toronto-bound flights with crew members who have “established linkages” in Pakistan, such as children, spouses or parents, as well as those who have worked in the organization for more than 15 years.

The airline avoids sending to Toronto those who are single or don’t have established family ties in Pakistan, he said.

Khan said he and the airline are no longer in contact with the flight attendants because, they discovered, they usually change their phone numbers soon after disappearing in Toronto.

Who disappeared?

The PIA flight attendants who vanished in Canada are seasoned pros in their late 30s or 40s, some of whom have worked for the airline for as long as two decades, Khan said.

“There was never any sign from them that they would seek something like that,” he said. “So that is something that is bothering us in the matter because working with people who have been working with you for a long time and then something happens like this is pretty unexpected.”

In one of the latest cases in February, the crew members were waiting to take the bus back to the airport from the hotel in Toronto and one of the flight attendants didn’t show up, Khan said.

The airline was unable to reach the flight attendant on her cellphone or hotel landline so, Khan says, they asked hotel management to check if she was OK.

“When the crew went there, she left her uniform there with a note saying, ‘Thank you PIA,'” Khan said, which he interpreted as a genuine sentiment of gratitude for her more than 15 years of service with PIA rather than a taunt.

Khan said the crew members who disappeared were “family values people” who had good careers in Pakistan.

Asylum policies

Individuals can make a refugee claim in Canada at a port of entry upon arrival or online if they are already in Canada, according to the Canadian government’s website.

Canadian immigration or border officials will determine if the person is eligible for a hearing before the Immigration and Refugee Board. All claimants must undergo health and security screenings, the government says.

If eligible to make a claim in Canada, refugee claimants can access social assistance, education, health services, emergency housing and legal aid pending a decision on their claim. Most can apply for a work permit after a medical examination.

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Alberta's population surges by record-setting 202,000 people: Here's where they all came from – CBC.ca

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Alberta smashed population-growth records in the past year, mainly due to people moving to the province from across Canada and around the world.

The province’s population surged to just over 4.8 million as of Jan. 1, according to new estimates released Wednesday by Statistics Canada.

That’s an increase of 202,324 residents compared with a year earlier, which marks — by far — the largest annual increase on record.

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Alberta also broke a national record in 2023 for interprovincial migration, with a net gain of 55,107 people.

“This was the largest gain in interprovincial migration nationally since comparable data became available in 1972,” Statistics Canada said in a release.


Most of the interprovincial migrants came from Ontario and British Columbia.

Statistics Canada estimates that 38,236 Ontarians moved to Alberta last year, versus 14,860 Albertans who moved to Ontario, for a net gain of 23,376 people.

Similarly, an estimated 37,650 British Columbians moved to Alberta, compared to 22,400 Albertans who moved to B.C., for a net gain of 15,250.


All told, interprovincial migration accounted for 27 per cent of Alberta’s population growth over the past year.

That put it just ahead of permanent immigration, which accounted for 26 per cent, and well ahead of natural population increase (more births than deaths), which accounted for eight per cent.

The largest component, however, was temporary international migration.

Non-permanent residents from other countries accounted for 39 per cent of the province’s population growth in the past year, reflecting a national trend.


Canada’s population reached 40,769,890 on Jan. 1, according to Statistics Canada estimates, which is up 3.2 per cent from a year ago.

“Most of Canada’s 3.2-per-cent population growth rate stemmed from temporary immigration in 2023,” Statistics Canada noted.

“Without temporary immigration, that is, relying solely on permanent immigration and natural increase (births minus deaths), Canada’s population growth would have been almost three times less (1.2 per cent).”

Alberta’s population, meanwhile, grew by 4.4 per cent year-over-year.

Alberta now represents 11.8 per cent of the country’s population, its largest proportion on record. 

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Why Canada's record population growth is helping – and hurting – the economy – CTV News

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Canada has recorded the fastest population growth in 66 years, increasing by 1.3 million people, or 3.2 per cent, in 2023, according to a new report from Statistics Canada.

The country has not seen such growth since 1957, when the spike was attributed to the baby boom and an influx of immigrants fleeing Hungary.

The vast majority of Canada’s growth last year was due to immigration, with temporary residents — which includes foreign workers and international students — making up the largest proportion of newcomers.

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“We need people coming to Canada to help with our economy,” says Matti Siemiatycki, a professor of planning at the University of Toronto. “There are many jobs and professions where there are vacancies, and that is having an impact, whether in the healthcare sector or trades and construction sector.”

Siemiatycki adds immigrants also bring “ingenuity… resources… and culture” to Canada.

Newcomers are relied on to help keep pace with Canada’s aging population and declining fertility rates, but the influx also presents a challenge for a country struggling to build the homes and infrastructure needed for immigrants.

“It’s an incredibly large shock for the economic system to absorb because of just the sheer number of people coming into the country in a short period of time,” says Robert Kavcic. a senior economist and director with BMO Capital Markets.

“The reality is population can grow extremely fast, but the supply side of the economy like housing and service infrastructure, think health care and schools, can only catch up at a really gradual pace,” Kavcic says. “So there is a mismatch right now.”

The impact of that mismatch can most acutely be seen in the cost of rent, services and housing.

In December, Kavcic wrote in a note that Canada needs to build 170,000 new housing units every three months to keep up with population growth, noting the industry is struggling to complete 220,000 units in a full year.

To address this, Ottawa has announced plans to cap the number of new temporary residents while also reducing the number of international student visas, a move economists say could offer some relief when it comes to housing and the cost of living.

“The arithmetic on the caps actual works relatively well because it would take us back down to 1 per cent population growth which we have been used to over the last decade and which is more or less absorbable by the economy,” Kavcic says. “The question is whether or not we see policy makers follow through and hit those numbers.”

Economists believe these changes could help ease inflationary pressures and may make a Bank of Canada rate cut more likely, but could also lead to slower GDP growth.

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