Inflation And Rising Costs Archives

Real estate summer slowdown typical for the season

September 4, 2024/in BizNews This Week, Housing, Inflation And Rising Costs/by Jim Zeeben

Despite falling interest rates, Greater Victoria’s housing market slowed in August and the benchmark price for an “average” home in the region decreased.

A total of 545 properties sold in the Victoria Real Estate Board region this August, down 16.5% from July. The benchmark value for a single family home in August was $1,287,400, down from July’s value of $1,296,100.

“The final month of the summer is generally a rather relaxed one in terms of real estate sales and listings,” 2024 Victoria Real Estate Board Chair Laurie Lidstone said. “Many folks pause their home shopping activities or pause their sales listing to make the most of other summer activities and vacations. It’s no surprise that sales this year were so close to the sales from 2023 and that listings declined slightly from the number we saw in July.”

Bank cuts rate again this morning; more cuts coming?

September 4, 2024/in BizNews This Week, Inflation And Rising Costs/by Jim Zeeben

As expected, the Bank of Canada reduced its target for the overnight rate to 4.25%.

The announcement, made this morning, reflects the consistent decline in inflation, which came in at 2.5% in July.

“With continued easing in broad inflationary pressures, Governing Council decided to reduce the policy interest rate by a further 25 basis points,” the bank said in its statement. “Excess supply in the economy continues to put downward pressure on inflation, while price increases in shelter and some other services are holding inflation up.”

The next rate announcement is Oct. 23, with another reduction expected.

Slowing inflation paves way for further interest rate cuts

August 22, 2024/in BizNews This Week, Global Uncertainty, Inflation And Rising Costs/by Jim Zeeben

The wind appears to be out of the sails of inflation, clearing the way for reduced borrowing costs later this year.

Statistics Canada reported yesterday that the Consumer Price Index rose 2.5% in July, the slowest pace since March 2021. Lower costs for phone services, computers and vehicles offset a slight increase in fuel prices.

“Businesses that have been wary of taking on debt will be a little more optimistic at the prospect of borrowing to invest in the growth of their operations,” Chamber CEO Bruce Williams said. “The economy needs that dynamic to become more productive, increase revenue and provide opportunities to incentivize staff with higher wages and workplace initiatives.”

Slowing inflation won’t bring back lower costs but it will give the Bank of Canada a clear signal to further reduce interest rates.

However, a looming rail strike could impact supply chains and lead to pressure on the price of goods.

In case you missed it yesterday, you can listen to Bruce Williams speaking about inflation and the rail strike on CBC Radio.

Bank of Canada cuts interest rates again, as expected

July 24, 2024/in Business And Economic Strength, Inflation And Rising Costs/by Jim Zeeben

The Bank of Canada has further reduced its overnight rate.

The cut was widely expected by economists as inflation appears to be under control and heading back to the target 2% rate. The next opportunity to further reduce interest rates is in September.

The Bank also released its Business Outlook Survey and its Canadian Survey of Consumer Expectations on July 15. Both reports found that public expectations for future inflation are in line with Bank forecasts.

Real estate market continues showing signs of calm

July 3, 2024/in Business And Economic Strength, Finding And Keeping Workers, Housing, Inflation And Rising Costs/by Jim Zeeben

The region’s real estate market appears to have taken a deep breath in June, as overall sales were down 13.4% from May. The numbers reflect seasonal expectations.

“I think this is good news, as the more stable the market is, the more it supports both buyers and sellers,” Victoria Real Estate Board Chair Laurie Lidstone said in a media release. “If we continue to see seasonal norms in our market, the upcoming summer months will be slower and quieter than spring was, as consumer priorities shift to vacations and outdoor pursuits. If the pattern continues, we’ll likely see an increase in activity as fall nears.”

There were 3,460 active listings at the end of June, up 3.7 % from May.

June’s benchmark value in the Victoria Core was $1,295,500 for a single family home and $567,900 for a condo.

Inflation shows its stubborn side with bump in May

June 26, 2024/in Business And Economic Strength, Global Uncertainty, Inflation And Rising Costs/by Jim Zeeben

Inflation rose 2.9% on a year-over-year basis in May, up from a 2.7% rise in April.

The increase came as a surprise for many economists who are watching for the Consumer Price Index to return to the 2% target, which the Bank of Canada considers to be sustainable inflation.

Statistics Canada said May’s increase was caused by higher prices for services, specifically cellular services, rent and air fares.

“The increase in services inflation is not helpful, especially as wage growth is elevated. The risk of a strong rebound in the housing market hasn’t materialized yet, but slowing shelter inflation is welcome news,” Canadian Chamber Senior Economist Andrew DiCapua said. “Our consumer spending tracker is showing growth presenting a risk that demand is more robust. Odds of a cut in July are lower and still depend on whether the economy is weaker than the Bank’s recent forecast. Governing Council continues to be heavily data dependent, and this reversal will support their restrictive bias. The Bank will want to take a slow and measured approach, especially with inflation accelerating.”

The Consumer Price Index for June will be released on July 16, ahead of the next interest rate decision on July 24.

Lessons of past can help us improve future economy

June 19, 2024/in Business And Economic Strength, Global Uncertainty, Inflation And Rising Costs/by Jim Zeeben

Canada’s economy made a significant shift last month when the Bank of Canada dropped its interest rate for the first time in four years. Now the Bank’s governor is saying he and his central bank peers are navigating a new world.

“We’ve also learned some lessons from the post-pandemic inflation, and we will take these to heart,” Tiff Macklem told the International Economic Forum of the Americas on June 12. “But the challenges of the future are rarely the same as those of the past. Supply shocks are more likely in the future. New technologies not only have the potential to increase prosperity but also to disrupt. Interest rates may be easing in many economies, but global interest rates are unlikely to return to pre-pandemic levels. The new normal won’t be the old normal. And if we’re not going back, we’ll all need to adjust.”

Macklem said supply-side economics, inflation as a common enemy and public trust in the banking system are the biggest lessons learned from the past four years.

The Bank’s next interest rate announcement is set for July 24.

Bank of Canada drops interest rate for first time in four years

June 5, 2024/in Business And Economic Strength, Housing, Inflation And Rising Costs/by Jim Zeeben

Finally. The weather forecast calls for clear skies and warm days this weekend, the HarbourCats have fireworks planned for Saturday night, after their homeopener on Friday — and the Bank of Canada has taken the initial step to reduce the pain of high interest rates.

For the first time since March 2020, the bank lowered its overnight rate. It’s now 4.75%, down from 5%, and expected to drop further in the months ahead.

“We’ve been hearing from members who have felt squeezed by the high rates and what that has meant for their customers who have been feeling squeezed themselves,” Chamber CEO Bruce Williams said. “No one wants inflation to return, but we’re hopeful this move by the bank marks a return to stability needed for businesses to make those investments that help them grow.”

The bank’s governor, Tiff Macklem, was careful not to promise future cuts, but the Conference Board of Canada stated that conditions are right for the rate to fall further.

Inflation slows again in April, raising hope for rate cut

May 22, 2024/in Inflation And Rising Costs/by Jim Zeeben

Make sure to circle June 5 on your calendar after Statistics Canada’s latest figures show inflation continues to slow down. The Consumer Price Index for April rose by 2.7%, compared to 2.9% in March. If you take gas prices out of the equation, the CPI was actually down to 2.5% in April.

“April’s CPI report adds weight to the thesis that interest rate cuts will begin in June,” the Conference Board of Canada said about the Bank of Canada’s next interest rate announcement on June 5. “On balance, signs suggest that June remains ‘within the realm of possibilities’ for the Bank’s first rate cut.”

Sticky inflation and high interest rates discourage investment, slowing the economy and adding to uncertainty.

Online tool tracks ongoing changes to grocery prices

May 1, 2024/in Inflation And Rising Costs/by Jim Zeeben

It’s been the hot-button topic for so long, it’s easy to forget just how much inflation has forever changed the cost of household budgeting.

An online tool can help track exactly how much individual goods have changed in price. The Average Retail Food Prices Data Visualization Tool is helpful to show the price increase or decrease for 105 typical grocery items. For example, the cost for one kilogram of chicken breast in BC was $18.18 in March compared to $16.71 a year earlier. Meanwhile, a 454 gram block of butter was $6.08 in March — down from $6.45 in the same month in 2023.

In BC, the item that saw the largest increase in price over the last year is infant formula, which is up 24% year over year.