Inflation And Rising Costs Archives

New report offers insight into Canadian real estate

March 5, 2025/in BizNews This Week, Finding And Keeping Workers, Housing, Inflation And Rising Costs/by Jim Zeeben

What do the current events of 2025 mean for Canada’s real estate industry? There’s no crystal ball to foretell the future, but the expert prognosticators at Doane Grant Thornton have put together some thoughtful insights in their 2025 Real Estate market summary. The report looks at key trends, including the political winds blowing north from south of the border as well as the state of capital markets and impact of AI.

You can read about various asset classes and more at doanegrantthornton.ca.

BC Budget 2025 attempts to tackle trade war’s unknowns

March 5, 2025/in BizNews This Week, Chamber Awareness, Global Uncertainty, Government Provincial, Inflation And Rising Costs/by Jim Zeeben

The best news from yesterday’s BC Budget 2025 announcement was a promise from the provincial Finance Minister to work more closely with businesses going forward.

As is tradition, the minister met with the Greater Victoria Chamber of Commerce today to discuss the budget.

Brenda Bailey, a former tech sector entrepreneur, was elected to government in 2020 and appointed Finance Minister in November 2024. Her first budget day was overshadowed by news that the United States was moving ahead with a trade war on Canada.

Bailey acknowledged the curveball, noting that the budget was put together with tariffs in mind. There is also $4 billion in contingency funds set aside annually for three years to address unforeseen challenges. It’s a strategy that makes sense, but one business groups will be watching closely.

“We want to see policies that are looking at the horizon, that are investing in making our private sector bigger, growing our economy,” Chamber CEO Bruce Williams said. “We’re fortunate to live in a region with a diverse economy that is relatively sheltered from a trade war. That said, we know we’re in for challenging times ahead as Canada will be impacted by tariffs.”

In response to the US’s tariff announcement, the Canadian Chamber issued a statement saying the trade war will hurt Americans and have disastrous impacts on people in many US cities.

“Canada is resource and talent rich. Our economic future is ours to determine — it’s time to join our economic strategy with concrete action to not only minimize the short-term damage but to chart a more prosperous path long-term,” Canadian Chamber president and CEO Candace Laing said.

Read the Full Media Release

Food prices drop for first time since 2017: CPI at 1.9%

February 19, 2025/in BizNews This Week, Global Uncertainty, Inflation And Rising Costs/by Jim Zeeben

Canada’s inflation rate ticked up slightly in January, to 1.9%.

“The (tax) holiday gave Canadians a bit of a break on prices for alcohol, food and clothing — enough to bring restaurant prices down for the first time since 2017,” Canadian Chamber economist Andrew DiCapua said. “However, that relief was overshadowed by higher energy prices which kept overall inflation pressures elevated.”

The Bank of Canada had forecast inflation to come in at 1.7% in January, which likley indicates it will not cut interest rates at its March 12 meeting, DiCapua said.

“Despite our working assumption that rates should be lowered to neutral (around 2%) by Summer 2025, the Bank will likely pause rates at their next meeting to evaluate the effects of their monetary policy.”

Tariff threat on hold, but clock ticks for new plan for Canada

February 5, 2025/in BizNews This Week, Chamber Awareness, Global Uncertainty, Inflation And Rising Costs/by Jim Zeeben

Businesses were quick to respond to the imminent threat of US tariffs, with calls to support local and buy Canadian.

Now that the trade war has been “paused,” it’s clear we need to be better prepared in case US President Donald Trump does impose crippling tariffs on Canadian products.

Chamber CEO Bruce Williams has been speaking to local media about efforts to support local businesses and analyze what the chaotic trade talk might mean.

“I think the concerning part, for a lot of people, is the uncertainty as to whether or not it’s going to happen. And, if so, what is it going to look like? And will the Americans come to an understanding that it’s damaging to them as well as to us,” Chamber CEO Bruce Williams told CHEK News in January.

The national Chamber network is calling for a multi-partisan approach to develop an “all-in” strategy. Canadian Chamber President Candace Laing said unity is vital so we can “address critical roadblocks that have left Canada too dependent on trade with the United States.”

Priorities of the All-In Plan:

Make it easier to trade within Canada to build our economy and resilience from within
Build modern trade infrastructure to get Canadian goods overseas
Reduce red tape for businesses held back by piled up paperwork
Lower taxation so businesses can compete globally while diversifying trade relationships.

“Businesses have durable relationships, which will chart a secure, prosperous future, but Canada’s leaders need to get back in gear for it to work. When Canadians and Americans see Parliament closed, they see a rudderless ship,” Laing said. “We need to send a strong message to President Trump and the world that we will rise to this occasion, as a unified Canada. Tariffs tomorrow instead of tariffs today still leave businesses, workers and families in the lurch. $3.6 billion in trade every day hangs in the balance.”

Bank cuts interest rates again as uncertainty remains

January 29, 2025/in BizNews This Week, Chamber Awareness, Global Uncertainty, Inflation And Rising Costs/by Jim Zeeben

This morning, the Bank of Canada reduced its target for the overnight rate to 3%. The Bank also said it was ending quantitative tightening, starting gradually in early March.

Economic projections are more fuzzy now than they typically are because of the shifting political landscape, particularly the threat of US tariffs.

“With inflation around 2% and the economy in excess supply, Governing Council decided to reduce the policy rate a further 25 basis points to 3%. The cumulative reduction in the policy rate since last June is substantial. Lower interest rates are boosting household spending and, in the outlook published today, the economy is expected to strengthen gradually and inflation to stay close to target,” the Bank stated. “However, if broad-based and significant tariffs were imposed, the resilience of Canada’s economy would be tested. We will be following developments closely and assessing the implications for economic activity, inflation and monetary policy in Canada. The Bank is committed to maintaining price stability for Canadians.”

Inflation falls lower in December: Statistics Canada

January 22, 2025/in BizNews This Week, Inflation And Rising Costs/by Jim Zeeben

There was good news from Statistics Canada this week as the agency reported inflation continued to slow in December. The Consumer Price Index was 1.8% on a year-over-year basis in December, down from 1.9% in November. Restaurant meals and alcohol were directly connected to the deceleration.

A temporary GST break on some items took effect in December, lowering the cost of food, booze, tobacco and cannabis as well costs for recreation, education, reading, clothing and shoes.

Eight predictions for Canada’s economy in 2025

January 15, 2025/in BizNews This Week, Chamber Awareness, Fair Rules, Finding And Keeping Workers, Global Uncertainty, Government Federal, Housing, Immigration And Integration, Inflation And Rising Costs, New And Established Businesses/by Jim Zeeben

No one knows what the future holds, but that doesn’t mean we can’t take a shot at forecasting what’s to come. Here, with the help of the Canadian Chamber’s Business Data Lab, are Chief Economist Stephen Tapp’s eight predictions for the economy. Note that the following list is edited and condensed for space. Read the full article here.

1. Affordability will remain a key consumer and political concern

A big story in 2024 was that inflation was tamed faster than expected — the “soft-ish landing” few economists thought possible. But there are no victory parties planned. Prices are up almost 16% since 2020, and even more, for some essential items such as food and shelter. Politicians will keep searching for policy solutions ahead of the upcoming federal election.

2. Work stoppages will remain elevated

Take rising unit labour costs for businesses, add in workers’ anxieties about affordability and automation, and the result has been a huge increase in work stoppages over the past two years. The last time we had this many work stoppages was almost 40 years ago. Expect this trend to continue in 2025.

3. Immigration will slow down, but the government won’t hit its 2025 target

After pandemic lockdowns lifted, Canada significantly increased immigration, led by non-permanent residents. After a policy U-turn last year, Canada’s population growth is on track to go into reverse in 2025, causing a significant drag on headline economic growth. I would be surprised if, in an election year, the government hits the ambitious target to slow immigration this much, this fast.

4. Trump will weaponize uncertainty and impose tariffs on Canada’s exports

My base case for 2025 is that Trump will impose tariffs on Canadian exports, almost immediately after his inauguration. Our BDL modelling suggests such a move would be disastrous for North America’s economy. However, looking further down the road, I have much more conviction that the economic ties that bind us together will be strong enough that ultimately a trilateral North American trade pact will continue after Trump’s second term ends.

5. Bank of Canada will continue cutting rates and the dollar will depreciate further

The Bank cut rates at its last five meetings of 2024, bringing its policy rate down from 5% to 3.25%. Financial markets have priced in a few more rate cuts, bottoming out around 2.6%. If the tariff threat is realized, short-term Canadian interest rates need to go much lower to support activity. Given a diverging outlook for monetary policy relative to the US, the Canadian dollar would have further to fall, which will partially cushion the blow, but that will raise import prices and make Canadians rethink their travel plans to the US this year.

6. Canadian trade will initially outperform expectations

The unfortunate experience of steel and aluminum tariffs in Trump’s first term offer some guidance. There was an initial period when businesses “stockpiled” inventories before the tariffs came into force. We expect a similar dynamic this time around.

As such, I expect Canadian exports to outperform expectations, at least very early in 2025, as US importers rush to avoid potential tariffs.

7. Housing prices will rise again

With lower borrowing costs, combined with new mortgage rules to extend amortizations, along with the painfully slow process to raise housing supply, I expect average home prices in Canada to rise in 2025, causing more concern for first-time home buyers. New record highs in the next few years shouldn’t be ruled out.

8. Canadian productivity will be less awful

I’ll end with a mildly optimistic outlook for Canada’s productivity.

Canadians are working harder, not smarter. We’re putting in more hours. Unfortunately, output growth isn’t keeping pace. The result is less output produced per hour. Here’s hoping that this year, with lower borrowing costs, businesses and workers will ambitiously invest in new technologies to uncover better, faster and cheaper ways to create value. It’s desperately needed and something everyone can raise a glass to!

Second big-rate-cut aims to spur business investment

December 11, 2024/in BizNews This Week, Inflation And Rising Costs/by Jim Zeeben

The Bank of Canada slashed its overnight rate by 0.5% for the second time in a row.

This morning’s announcement brings the rate to 3.25%.

“Governing Council has reduced the policy rate substantially since June. Going forward, we will be evaluating the need for further reductions in the policy rate one decision at a time,” the Bank’s statement said, adding it is committed to holding inflation to its current rate of about 2%.

The Conference Board of Canada said its latest survey on business confidence showed 35.1% of business leaders cited higher interest rates as a factor affecting expenditures. It’s the first time since 2022 that fewer than 40% of businesses cited interest rates as a concern when making capital investments.

The Bank of Canada’s next scheduled rate announcement is Jan. 29, 2025.

Helping make sense of inflation/interest forecasts

November 20, 2024/in BizNews This Week, Inflation And Rising Costs/by Jim Zeeben

Over the past two years, a new pastime emerged called “what will the Bank of Canada do next?” When inflation began surging in 2021, the era of low interest rates suddenly ended. Now, with inflation back to the 2% target and interest rates falling, understanding where the economy is going is still not a simple task.

The hitchhiker’s guide to BoC watching in this easing cycle is the cheeky title of a new report released today by CIBC senior economist Ali Jaffery.

In the update, Jaffery notes the different tactics used by the Bank of Canada compared to the US Federal Reserve to communicate their intent ahead of rate announcements. The strategies differ in how they spoon-feed market watchers, with the Canadian central bank preferring to let the data do the talking. This reflects the more cautious nature of Canadians, Jaffery says.

As for what to expect from the Bank of Canada at their next rate announcement on Dec. 11, most economists see the most recent statistics as a harbinger of another rate cut.

“With upcoming GDP data expected to show weak economic growth, a 0.5% rate cut (on Dec. 11) seems likely,” Canadian Chamber Senior Economist Andrew DiCapua says. “While some sticky inflation pressures are easing, even the Bank’s anticipated uptick in inflation won’t change the narrative. Q3 GDP probably won’t deliver the strength they’re hoping for, which reinforces the need to support businesses and growth.”

Feds step in to end labour disputes at Canadian ports

November 13, 2024/in BizNews This Week, Fair Rules, Food Security, Global Uncertainty, Government Federal, Inflation And Rising Costs, Transportation Options/by Jim Zeeben

The Chamber was part of advocacy efforts that succeeded in ending the recent labour disputes that had shut down vital ports across Canada.

The Chamber was a signatory to a letter that went directly to federal Minister of Labour and Seniors Steven MacKinnon. That effort helped push the Canada Industrial Relations Board to announce on Tuesday that it will impose final binding arbitration to resolve labour disputes at ports in British Columbia, Montreal and Quebec.

This decision will swiftly end disruptions and resume port operations, while extending current collective agreements until new ones are finalized.

“As an Island economy, we need our supply chains to operate efficiently,” Chamber CEO Bruce Williams said. “Any disruptions can have critical impacts on businesses ability to plan with certainty.”