Canada’s inflation rate rose to 8.1 per cent last month, Statistics Canada says, the fastest annual increase in the cost of living in decades.
The data agency said gasoline was the biggest single contributor to the overall rate going up, as pump prices were up by 54.6 per cent compared to the same month a year ago.
If gasoline is stripped out, the inflation rate would be 6.5 per cent.
Another major source of inflation this year has been food prices, which rose by 8.8 per cent in the past year. That’s the same pace of increase seen the previous month, but economist Tu Nguyen with audit, tax and consulting agency RSM Canada says it’s too soon to conclude that food prices may have peaked.
“Part of that can be attributed to the fact that Canada consumes more domestically grown food in the summer, which helps keep costs down,” she said.
WATCH | How are you dealing with high prices for food?:
Higher prices for travel and tourism
On top of higher prices for food and gasoline, the data agency documented a surge in demand and prices for travel-related services.
“The return of sporting events, festivals and other large in-person gatherings has resulted in higher demand for accommodation, particularly in major urban centres,” Statistics Canada said.
Prices for accommodation rose by about 50 per cent across the country compared with a year ago, and the cost of air transportation rose by 6.4 per cent in the month, and is up by 25 per cent compared to a year ago.
Judy MacDonald owns a small hotel in Prince Edward Island, the Barachois Inn. Like many in the industry, she lost about 90 per cent of her business in 2020, and even last year was only about half what she’d normally see.
This year, feverish demand for tourism means she’s on track for perhaps her best year ever, but that hasn’t made her immune from feeling the pinch of inflation to the cost side of her ledger. To cover the rising cost of electricity and other utilities, she’s had to raise her prices by about $10 per room.
“There is a lot of pent-up need right now and I’m hoping that that is going to continue,” she told CBC News in an interview. “But costs are getting up there and I would like to see some of that come down.”
More rate hikes expected
Although the 8.1 per cent figure is the fastest annual increase since 1983, economists had been expecting the rate to come in even higher, with a consensus of those polled by Bloomberg forecasting a rate of 8.4 per cent.
“Today’s result is better, but not good,” is how economist Doug Porter with Bank of Montreal described it.
“It’s really saying something when an 8.1 per cent inflation rate is greeted with a modicum of relief in financial markets because it wasn’t quite as awful as expected.”
Despite yet another multi-decade high in inflation, Wednesday’s data will likely come as a small relief to the Bank of Canada, which has been undertaking an aggressive campaign of raising interest rates to rein in the runaway cost of living.
After raising its benchmark rate by the biggest amount in 20 years last week, the bank is forecast to keep raising lending rates, although perhaps not as aggressively as before.
“We expect the bank to continue hiking in September, albeit with a more moderate 50-point move at that time,” Porter said.
Shilpa Mishra, managing director with BDO Canada, says the inflation number coming in lower than experts were expecting is cautious good news for consumers and businesses, but she says as long as the rate is double or triple what the central bank likes to see, more rate hikes are likely.
“It’s like a slow climb on a roller-coaster ride,” she said in an interview. “You’re not sure when you are going to reach the top.”
Economist Stephen Brown with Capital Economics says there are reasons to be hopeful that inflation may be near its peak.
“The June data showed some encouraging signs, with the monthly price gains slowing across almost every category,” he said.
“Inflation will begin to fall in the coming months but, with the Bank of Canada intent on preventing further rises in inflation expectations, this will not stop it from raising interest rates at the September and October policy meetings.”
Canada politics: Billions not spent on promised programs – CTV News
The federal government failed to spend tens of billions of dollars in the last fiscal year on promised programs and services, including new military equipment, affordable housing and support for veterans.
Federal departments are blaming a variety of factors for letting a record total of $38 billion in funding lapse in 2021-22, including delays and disruptions caused by the COVID-19 pandemic.
They also say much of the money remains available for future years.
The unspent funds also played a big part in the Liberal government posting a smaller-than-expected deficit in the year ending March 31, 2022.
Canada rang up a $90.2 billion deficit — $23.6 billion less than had been projected in the budget.
The unprecedented amount of lapsed funding, much of which has been returned to the federal treasury, has one observer suggesting it is a sign of long-standing challenges delivering on big federal projects for the country.
The amount of lapsed funds across government is spelled out in the most recent iteration of the public accounts, a report on federal revenues and spending by every department and agency tabled in the House of Commons every year.
The $38.2 billion that was reported as lapsed in the last fiscal year marks a new record over the previous year, which was $32.2 billion. That was a dramatic increase over the previous record of $14 billion in 2019-20.
That compares to around $10 billion about a decade ago, when Stephen Harper’s Conservative government was accused by political opponents and experts alike of using large lapses to make cuts by stealth.
Health Canada and the Public Health Agency of Canada reported the largest lapses of all departments and agencies, with nearly $11.2 billion of their combined $28.2 billion budgets going unspent.
Much of that had been set aside for COVID-19 initiatives that were not needed, said Health Canada spokeswoman Tammy Jarbeau. Those include vaccines, personal protective equipment and rapid tests.
“Both Health Canada and the Public Health Agency of Canada have rigorous internal financial management controls designed to prevent, detect and minimize errors and financial losses, and ensure the funding is spent in the best interests of Canadians,” she wrote in an email.
The pandemic figured in the responses and explanations from many other departments and agencies, with many blaming COVID-19 for delays.
One of them was the Defence Department, which reported a lapse of $2.5 billion in the last fiscal year. Much of the money wasn’t spent due to delays in the delivery of new military equipment such as Arctic patrol vessels and upgrades to the Army’s armoured vehicles.
There were also delays on major infrastructure projects for the military, according to Defence Department spokeswoman Jessica Lamirande. Those include upgrading and rebuilding two jetties for the Navy in Esquimalt, B.C., and a new armoury in New Brunswick.
“The COVID-19 pandemic has had a significant impact on many of our business lines,” Lamirande said.
“The impacts of the pandemic on supply chain and industry capacity are causing manufacturing backlogs and delays.”
Lamirande added most of the unspent funds are expected to be available in future years through a process called reprofiling, in which schedules are revised to reflect planned spending in future years due to those delays.
Former parliamentary budget officer Kevin Page said the government’s handling of lapsed funding now is “a little more relaxed” than in previous years, when unspent funds were not reprofiled and even used to justify budget cuts in Ottawa.
But defence analyst David Perry of the Canadian Global Affairs Institute said the Defence Department’s lapse, which has been steadily growing in recent years, is a symptom of Ottawa’s continued difficulties purchasing new military equipment.
“If we’re not getting those procurement projects through, we’re not getting new equipment into the inventory, so we don’t actually have the gear for our troops,” he said, noting many of the delayed projects were launched under the Harper government.
Perry also noted the current rate of inflation, which is already naturally higher for military equipment and the defence sector than most other parts of the economy. Not spending money now means Canada will have to pay more for the same gear and services later, he said.
The Infrastructure Department, the Canadian Mortgage and Housing Corp. and the Fisheries Department, which includes the Canadian Coast Guard, also reported delays with different capital projects, including on affordable housing and broadband internet.
“Due to the unprecedented circumstances over the last few years such as the COVID-19 pandemic, disbursing funds to proponents for many projects are expected to and will take longer,” CMHC spokeswoman Claudie Chabot said in an email.
Perry suggested a bigger problem.
“The government of Canada’s ability to actually deliver services to the public, especially when it comes to large projects, large capital projects, be it for equipment or infrastructure or IT projects, is struggling across the board,” he said.
Other federal entities with large lapses included Indigenous Services Canada, which failed to spend $3.4 billion, and Crown-Indigenous Relations and Northern Affairs Canada, which reported a lapse of $2.2 billion.
Spokesman Vincent Gauthier attributed much of the latter lapse to “the timing and progress of negotiations for specific claims and childhood litigations,” adding that funds will be available “in some instances” in future years.
Gauthier did not say why Indigenous Services, which is responsible for delivering federal services to First Nations, Inuit and Metis, failed to spend billions of dollars. He did say most of the money had been reprofiled “so that it will be available when recipients need it.”
Veterans Affairs Canada also reported a nearly $1 billion lapse last year, which the department blamed on fewer ill and injured ex-soldiers applying for assistance than expected.
However, critics have described earlier lapsed funding as evidence of the challenges many veterans face in accessing benefits and services. In 2014, the Royal Canadian Legion demanded the Harper government explain why $1.1 billion went unspent over seven years.
This report by The Canadian Press was first published Jan. 30, 2023.
Forecast: Coldest temperatures this winter coming to Eastern Canada – CTV News
The beginning of February is expected to bring Arctic-like temperatures across much of Eastern Canada, thanks to frigid air from the polar vortex.
“I think it will be a real punch in the face for easterners,” Environment Canada senior climatologist David Phillips told CTVNews.ca. “It’s going to be pretty short-lived and it’s going to be right across the east.”
The cold snap will descend on Eastern Canada between Thursday night and Friday, with temperatures becoming seasonable again on Sunday. In between, much of Ontario, Quebec and Atlantic Canada can expect the coldest days yet this winter.
“We’ll see temperatures that are really, brutally cold,” Phillips said from Toronto. “It’s really a one-and-a-half-day wonder.”
According to Environment Canada, as the cold air tracks east, daytime highs will only reach -13 C in Toronto, -20 in Ottawa, -21 in Montreal and -23 in Quebec City on Friday, and -18 in Fredericton, -15 in Halifax, and -18 in Charlottetown on Saturday.
“It’ll be sunny and bright, because it’s Arctic air,” Philips said. “It’s very dry, and it will be crisp”
Overnight temperatures on Friday night could dip as low as -20 in Toronto, -31 in Ottawa, -30 in Montreal, -34 in Quebec City, -28 in Fredericton, -21 in Halifax, and -23 in Charlottetown – all more or less double what’s normal for this time of year.
“The last time it was that cold in Ottawa was 27 years ago,” Phillips explained. “You can go year after year after year and not see a temperature of -20 in Halifax.”
These temperatures do not factor in wind chill, which could make things feel even icier.
“It’s going to be very punishing,” Phillips said. “It’s clearly an Arctic invasion of frigid air.”
The short-lived and bitter winter blast is being blamed on a weakened polar vortex, which causes icy Arctic air to push south, leading to rapid and sharp temperature drops.
There is a silver lining for those who have been missing out on winter activities.
“The second half of winter, according to our models, seems certainly a little colder, more winter-like, than what we saw at the beginning of the winter,” Phillips said. “But everywhere in Canada, we’re now well the beyond the halfway point. There’s more winter behind us than ahead of us!”
While much of Western Canada has been shivering through the winter, it’s been a different story in the unseasonably mild east. Phillips says December and January in Ottawa, for example, were the third warmest on record in 150 years; and both Ottawa and Montreal have experienced no days below -20 this winter, when normally they would each have about 10. Ottawa’s Rideau Canal Skateway is also still closed when it typically opens in January. Warmer winter temperatures, however, have also brought abundant snow.
“If you’re in the east, it’s looking like winter, but it doesn’t feel like winter,” Phillips said. “But it’s going to feel like winter when the cold arrives.”
Canada province experiments with decriminalising hard drugs – BBC
Canada’s province of British Columbia is starting a first-in-the-nation trial decriminalising small amounts of hard drugs such as cocaine and heroin.
From Tuesday, adults can possess up to 2.5g of such drugs, as well as methamphetamine, fentanyl and morphine.
It follows a similar policy in the nearby US state of Oregon, which decriminalised hard drugs in 2020.
Ahead of the pilot’s launch, British Columbia and federal officials outlined the rules under the federally approved exemption from the Controlled Drugs and Substances Act.
While those substances will remain illegal, adults found in possession of a combined total of less than 2.5g of the drugs will not be arrested, charged or have their substances seized. Instead, they will be offered information on available health and social services.
Federal minister of mental health and addictions Carolyn Bennett on Monday called the move “a monumental shift in drug policy that favours fostering trusting and supportive relationships in health and social services over further criminalisation”.
Some 10,000 residents have died from drug overdoses since British Columbia declared drugs to be a public health emergency in 2016, officials said.
“Decriminalising people who use drugs breaks down the fear and shame associated with substance use and ensures they feel safer reaching out for life-saving supports,” said Jennifer Whiteside, the British Columbia minister for mental health and addictions.
Thousands of police officers in the province have been offered training on the rule change, including those in Vancouver, the largest city in the province.
The programme will run from 31 January 2023 until 31 January 2026, unless it is revoked by the federal government.
Some experts have questioned the 2.5g limit, saying that it is not enough to account for the habits of many addicts.
There are some exemptions to the scheme.
The sale of drugs remains illegal. It is also illegal to possess drugs on the grounds of schools, childcare facilities and airports.
Canada legalised the use of recreational cannabis for adults nationwide in 2018.
But the four drugs now allowed in small quantities remain prohibited, meaning there are no plans to sell them in stores, unlike marijuana. Trafficking them across borders also remains illegal.
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