Drop below 3% could prompt central bank to cut rate earlier
Canada’s inflation rate slowed to 2.9 per cent in January, marking the first time since June that it has fallen within the Bank of Canada‘s target range of one to three per cent.
The deceleration, from a rate of 3.4 per cent in December, was sharper than the 3.3 per cent reading expected by economists and the 3.2 per cent mark forecast by the central bank itself.
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Statistics Canada said the decline in the pace of inflation was mostly because of a year-over-year decline in gasoline prices.
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Excluding gasoline, the consumer price index grew by only 3.2 per cent in January, down from 3.5 per cent in December, it said.
“There is a lot to like in today’s inflation release,” said Randall Bartlett, senior director of Canadian Economics at Desjardins.
Among the positive signs was an easing in food inflation, with food prices growing just 0.1 per cent from December, the weakest month-over-month increase since March 2021.
While still elevated, the year-over-year increase in grocery prices fell to 3.4 per cent in January compared with 4.7 per cent in December, putting downward pressure on the all-items CPI.
“The effect of past rate hikes feed into consumer prices persistently with a lag,” Royal Bank of Canada economist Abbey Xu said.
Olivia Cross, North America economist at Capital Economics, said the Bank of Canada will be pleased with January’s inflation report, and not just because the headline rate slowed more than expected.
The central bank’s core measures of inflation, which strip out volatility in prices, also fell in January. CPI-trim and CPI-median clocked in below expectations at 3.4 per cent and 3.3 per cent year-over-year growth, respectively.
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CIBC economist Andrew Grantham noted that discretionary spending was slipping and the drop in demand finally appears to be affecting prices.
Conference Board of Canada researcher Kiefer Van Mulligen noted survey evidence from the Bank of Canada that shows consumers have pared back their price growth expectations for many goods, but many expect price growth for specific services, including rent, entertainment and meals at restaurants, to remain elevated.
“This fits with consumers’ recent experience,” he said.
Lower prices for airfares and travel tours also contributed to the headline deceleration. Prices for airfares fell 14.3 per cent in January, compared with a 9.7 per cent decline in December on a year-over-year basis.
Airfares typically decline in January as heightened holiday demand subsides, the statistics agency said. On a monthly basis, prices fell 23.7 per cent in January compared with a 31.1 per cent gain in December.
“That is a positive sign for the Bank of Canada, and will have financial markets pulling forward expectations for a first interest rate cut today, which we see being delivered in June,” said Grantham.
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Tuesday’s reading will be the last inflation report before the Bank of Canada’s next rate decision on March 6. The central bank is widely expected to hold its policy rate steady at five per cent with cuts to begin by mid-year.
RBC’s Xu said the most likely path for inflation going forward is still lower with per-capita GDP and consumer spending continuing to decline.
The strong start to 2024 for job markets gives the central bank more leeway to wait for firmer signs that inflation is getting back under control before pivoting to interest rate cuts, she said.
The economist doesn’t believe policy makers should be in a rush to start cutting.
“As of now, our base case assumes the BoC starts to lower interest rates around mid-year,” she said.
After Tuesday’s data, markets pulled forward their bets on the timing of the first interest rate cut, putting almost even odds on the April meeting, up from about 25 per cent previously.
Additional reporting by Bloomberg.
• Email: dpaglinawan@postmedia.com
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BELGRADE, Serbia – Canada’s Denis Shapovalov is back in the winner’s circle.
The 25-year-old Shapovalov beat Serbia’s Hamad Medjedovic 6-4, 6-4 in the Belgrade Open final on Saturday.
It’s Shapovalov’s second ATP Tour title after winning the Stockholm Open in 2019. He is the first Canadian to win an ATP Tour-level title this season.
His last appearance in a tournament final was in Vienna in 2022.
Shapovalov missed the second half of last season due to injury and spent most of this year regaining his best level of play.
He came through qualifying in Belgrade and dropped just one set on his way to winning the trophy.
Shapovalov’s best results this season were at ATP 500 events in Washington and Basel, where he reached the quarterfinals.
Medjedovic was playing in his first-ever ATP Tour final.
The 21-year-old, who won the Next Gen ATP Finals presented by PIF title last year, ends 2024 holding a 9-8 tour-level record on the season.
This report by The Canadian Press was first published Nov. 9, 2024.
The Canadian Press. All rights reserved.
VANCOUVER – Contract negotiations resume today in Vancouver in a labour dispute that has paralyzed container cargo shipping at British Columbia’s ports since Monday.
The BC Maritime Employers Association and International Longshore and Warehouse Union Local 514 are scheduled to meet for the next three days in mediated talks to try to break a deadlock in negotiations.
The union, which represents more than 700 longshore supervisors at ports, including Vancouver, Prince Rupert and Nanaimo, has been without a contract since March last year.
The latest talks come after employers locked out workers in response to what it said was “strike activity” by union members.
The start of the lockout was then followed by several days of no engagement between the two parties, prompting federal Labour Minister Steven MacKinnon to speak with leaders on both sides, asking them to restart talks.
MacKinnon had said that the talks were “progressing at an insufficient pace, indicating a concerning absence of urgency from the parties involved” — a sentiment echoed by several business groups across Canada.
In a joint letter, more than 100 organizations, including the Canadian Chamber of Commerce, Business Council of Canada and associations representing industries from automotive and fertilizer to retail and mining, urged the government to do whatever it takes to end the work stoppage.
“While we acknowledge efforts to continue with mediation, parties have not been able to come to a negotiated agreement,” the letter says. “So, the federal government must take decisive action, using every tool at its disposal to resolve this dispute and limit the damage caused by this disruption.
“We simply cannot afford to once again put Canadian businesses at risk, which in turn puts Canadian livelihoods at risk.”
In the meantime, the union says it has filed a complaint to the Canada Industrial Relations Board against the employers, alleging the association threatened to pull existing conditions out of the last contract in direct contact with its members.
“The BCMEA is trying to undermine the union by attempting to turn members against its democratically elected leadership and bargaining committee — despite the fact that the BCMEA knows full well we received a 96 per cent mandate to take job action if needed,” union president Frank Morena said in a statement.
The employers have responded by calling the complaint “another meritless claim,” adding the final offer to the union that includes a 19.2 per cent wage increase over a four-year term remains on the table.
“The final offer has been on the table for over a week and represents a fair and balanced proposal for employees, and if accepted would end this dispute,” the employers’ statement says. “The offer does not require any concessions from the union.”
The union says the offer does not address the key issue of staffing requirement at the terminals as the port introduces more automation to cargo loading and unloading, which could potentially require fewer workers to operate than older systems.
The Port of Vancouver is the largest in Canada and has seen a number of labour disruptions, including two instances involving the rail and grain storage sectors earlier this year.
A 13-day strike by another group of workers at the port last year resulted in the disruption of a significant amount of shipping and trade.
This report by The Canadian Press was first published Nov. 9, 2024.
The Canadian Press. All rights reserved.
The Royal Canadian Legion says a new partnership with e-commerce giant Amazon is helping boost its veterans’ fund, and will hopefully expand its donor base in the digital world.
Since the Oct. 25 launch of its Amazon.ca storefront, the legion says it has received nearly 10,000 orders for poppies.
Online shoppers can order lapel poppies on Amazon in exchange for donations or buy items such as “We Remember” lawn signs, Remembrance Day pins and other accessories, with all proceeds going to the legion’s Poppy Trust Fund for Canadian veterans and their families.
Nujma Bond, the legion’s national spokesperson, said the organization sees this move as keeping up with modern purchasing habits.
“As the world around us evolves we have been looking at different ways to distribute poppies and to make it easier for people to access them,” she said in an interview.
“This is definitely a way to reach a wider number of Canadians of all ages. And certainly younger Canadians are much more active on the web, on social media in general, so we’re also engaging in that way.”
Al Plume, a member of a legion branch in Trenton, Ont., said the online store can also help with outreach to veterans who are far from home.
“For veterans that are overseas and are away, (or) can’t get to a store they can order them online, it’s Amazon.” Plume said.
Plume spent 35 years in the military with the Royal Engineers, and retired eight years ago. He said making sure veterans are looked after is his passion.
“I’ve seen the struggles that our veterans have had with Veterans Affairs … and that’s why I got involved, with making sure that the people get to them and help the veterans with their paperwork.”
But the message about the Amazon storefront didn’t appear to reach all of the legion’s locations, with volunteers at Branch 179 on Vancouver’s Commercial Drive saying they hadn’t heard about the online push.
Holly Paddon, the branch’s poppy campaign co-ordinator and bartender, said the Amazon partnership never came up in meetings with other legion volunteers and officials.
“I work at the legion, I work with the Vancouver poppy office and I go to the meetings for the Vancouver poppy campaign — which includes all the legions in Vancouver — and not once has this been mentioned,” she said.
Paddon said the initiative is a great idea, but she would like to have known more about it.
The legion also sells a larger collection of items at poppystore.ca.
This report by The Canadian Press was first published Nov. 9, 2024.
The Canadian Press. All rights reserved.
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