A low inflation rate in Manitoba is a sign the province’s gas tax holiday is working, the premier is boasting, but the low rate may also demonstrate the economy he presides over is slumping.
Premier Wab Kinew hosted a news conference Tuesday to celebrate Manitoba’s annual inflation rate dropping to 0.8 per cent in January, which is the lowest growth in a country struggling mightily with the rising cost of living.
Statistics Canada acknowledges in its report that Manitoba’s decision to remove the provincial gas tax temporarily, beginning in January, has contributed to its low inflation rate.
Kinew treated the report as validation of his government’s decision.
“Governments can’t do everything, and we recognize that, but governments can do some things. And I’m very proud that in the first few months of our administration taking office, we have done one thing to make your life more affordable,” Kinew said.
“Of course, the fight and the ongoing impacts of inflation are by no means over, but today the good news is we are taking action to help you and your family.”
Gas-tax cut helps tank inflation
Starting on Jan. 1, Manitoba drivers stopped paying the provincial 14 cent-a-litre tax on gasoline and diesel fuel. The suspension will last for at least six months, with the option to extend it for the duration of the year.
While Manitoba’s inflation rate was already the country’s lowest (1.7 per cent last December) prior to the gas tax holiday, Statistics Canada said in a statement the lower price of gas was the “largest contributor” to Manitoba’s inflationary decline and had “roughly twice the impact” of the other categories the agency measures to assess inflation.
Other factors include the price of groceries increasing at a slower rate year-over-year, and a lower cost for air transportation, Statistics Canada said.
“We expected to be able to lower the inflation rate in Manitoba by cutting the provincial fuel tax, and now we have the concrete evidence to back that up,” Kinew told reporters.
On a nationwide level, Canada’s annual inflation rate slowed to 2.9 per cent in January, mostly due to a deceleration in the price of gas.
Manitoba’s 14 cent-a-litre reduction on gas prices ultimately had an impact on the national inflationary average.
Shiu-Yik Au, an assistant professor of finance at the University of Manitoba’s Asper School of Business, said the price of gas has an outsized role on the inflation rate because energy costs impact many other factors, ranging from grocery prices to business expenses.
Still, a slowing inflation rate could be a sign that Manitoba’s economy is slumping, Au said. He noted the Bank of Canada prefers interest rate growth in the range of one to three per cent.
“We’re starting to drift toward the too few, too little” category, Au said.
Shiu-Yik Au, an assistant professor of accounting and finance at the Asper School of Business, says he’s wary of the province reporting an inflation growth rate in January that falls below one per cent. (Submitted by Shiu-Yik Au)
He said Kinew is right to talk up the provincial economy to bolster consumer confidence, since people tend to spend less when they feel the economy is sagging.
“If they cut back spending, it’s going to slow down economic growth, which is going to lead to slightly lower inflation,” Au said, while indicating one month doesn’t signify a trend on its own.
Deloitte Canada, however, recently pegged Manitoba’s economic growth in 2024 at a “relatively subdued” 0.4 per cent. The firm anticipates a “rough ride” for the manufacturing sector and expects households to “pull back” on spending, although the construction of various projects will offset some of those losses.
Asked about the various economic forecasts projecting some headwinds for the province, Kinew said his government always wants to “see more growth” before again pointing to the low inflation rate as a good sign for the provincial economy.
PCs worry about other taxes
In a statement, Obby Khan, the Progressive Conservatives’ finance critic, said the NDP government is “distracting” Manitoba with short-term tax relief while also letting school divisions raise school taxes without penalizing them and continuing to charge the federal carbon tax — slated to increase in April — on home heating bills.
Kinew wouldn’t reveal on Tuesday if his government would extend the fuel-tax cut into the second half of 2024.
While he’s encouraged by the lower inflation rate, the premier said interest rates remain high and are affecting people’s ability to pay their mortgages and other debts.
Kinew said his government would help Manitobans so long as those impacts are felt, but he wouldn’t specify how.
TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.
The S&P/TSX composite index closed up 93.51 points at 23,568.65.
In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.
The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.
The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.
The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.
This report by The Canadian Press was first published Sept. 13, 2024.
OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.
The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.
The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.
The personal and household goods subsector fell 2.5 per cent to $12.1 billion.
In volume terms, overall wholesale sales rose 0.5 per cent in July.
Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.
This report by The Canadian Press was first published Sept. 13, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 172.18 points at 23,383.35.
In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.
The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.
The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.
The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.
This report by The Canadian Press was first published Sept. 12, 2024.
