Inflation watchers breathed a sigh of relief Wednesday morning as the latest report on Canada's Consumer Price Index shows the rate appears to have stalled out at 6.9%. While the number is still more than double the Bank of Canada's target rate, the fact it no longer seems to be increasing is reason for optimism. High inflation creates uncertainty for businesses facing difficult decisions around how they will increase prices and raise wages.

Inflation jumped to 8.1% in June — the highest it had been in decades — prompting the Bank of Canada to raise its interest rate target six times in an attempt to slow the economy.

As we honour members of the armed forces and their sacrifices this Remembrance Day, The Chamber is proud to have a long history of commemorating the soldiers who paid the ultimate price for our freedom.
 
After the First World War, The Chamber was instrumental in helping create Memorial Avenue that still runs along Shelbourne Street. Shelbourne was chosen as it offered enough space to commemorate every soldier from the city who died in the war. Chamber members helped plan the project, and business owners rolled up their sleeves to dig holes for the trees, providing shade and succour over the years.
 
After a two-year hiatus due to COVID, the Royal Canadian Legion will be incorporating the veterans’ parade into the national Remembrance Day ceremony. Here in Greater Victoria, a Remembrance Day ceremony will be held at the BC Parliament Buildings from 10:30 am – 1 pm this Friday. Municipalities across the region are also hosting ceremonies and we encourage all members to attend.

We hope you have a day of reflection and remembrance.
 
The Chamber will be closed Friday, Nov. 11.

With winter looking likely to bring a chilling to Canada's economy as well as the weather, The Chamber is urging government to promote investment in business growth that can light the way through winter.
 
Working with our national network, The Chamber is calling on federal Finance Minister Chrystia Freeland to work together with business.
 
"Attempting to borrow our way to prosperity would only generate more debt and inflation," Canadian Chamber CEO Perrin Beatty said, noting a better way is to use available "no-cost and low-cost tools" that will increase government revenue and grow the economy. "These measures include reforming regulation, increasing labour force participation and eliminating longstanding barriers to interprovincial trade, while avoiding new taxes and ending rhetoric that portrays Canadian businesses as the problem instead of as partners in growing a stronger economy."
 
Minister Freeland is scheduled to provide a fall economic update on Thursday.

The Bank of Canada raised its policy interest rate today by 50 basis points, which aligns with what many experts had been predicting. The move indicates that measures are still required to return balance to Canada's economy.

Inflation has declined from 8.1% to 6.9%, though it's still well above the target of 2-3%.

"The Bank expects CPI inflation to ease as higher interest rates help rebalance demand and supply, price pressures from global supply disruptions fade, and the past effects of higher commodity prices dissipate," states today's news release. "CPI inflation is projected to move down to about 3% by the end of 2023, and then return to the 2% target by the end of 2024."

Another increase to interest rates is expected on Dec. 7, but will depend on how much demand has slowed, and how well improving supply chains are able to keep up.

To paraphrase that old Isley Brothers hit, it's not quite time to "Shout," but inflation is trending "a little bit softer now."

The latest figures from Statistics Canada show the pace of inflation slowed in September, with the cost of goods rising 6.9% from a year earlier. Inflation has been declining for three months, after peaking at 8.1% in June.

The sharp rise in costs was initially attributed to fuel shortages caused by the war in Ukraine, a super-heated housing market and supply chain disruptions caused by the pandemic. However, fuel costs have stopped rising as sharply and supply chains are getting close to their typical efficiencies.

"However, these gains were largely offset by the continued rise of prices for food and services. Unfortunately, there was no progress on 'core' inflation, which held steady at 5%," Canadian Chamber of Commerce Chief Economist Stephen Tapp said. "Today’s lack of progress on inflation — together with Bank of Canada surveys released earlier this week that suggested inflation expectations remain elevated — should be concerning enough to the Bank of Canada for them to deliver the 50 basis-point interest rate hike that the market expects (Oct. 26)."

The latest numbers show inflation has cooled faster than expected. The August Consumer Price Index was up 7% over last year — less than the 7.3% that had been forecast. Core inflation was also lower than expected.
 
The drop in inflation comes after the Bank of Canada raised interest rates. However, it will take more than numbers to stem inflation and get Canada's economy back on track, said the bank's Deputy Governor Paul Beaudry.
 
"Some have suggested that policy-makers need to engineer a substantial slowdown — or even a recession — to get inflation back under control," Beaudry said in a speech on Tuesday. "But the best strategy for responding to high inflation needs to consider how people form their inflation expectations. If people understand and believe that the central bank will eventually bring inflation back to target, their expectations will remain 'anchored.'”
 
Businesses and employers can help by moderating increases to prices or wages, with the understanding that inflationary pressures are temporary. Not an easy task for organizations facing increasing costs and still recovering from pandemic challenges.

The death of Queen Elizabeth II on Sept. 8 has led to a tremendous response from people around the world.

"On behalf of our Chamber members, Board of Directors and Staff we offer sincere condolences to all who are feeling grief and sadness at the passing of Queen Elizabeth," Chamber CEO Bruce Williams said in a statement last week. "These historic events bring us together in conversations about the impact the Royal Family and Her Majesty have had on our world and our lives. Her years of service are an inspiration to all who offer their lives to service of others."

Yesterday, the federal government announced it would mark the Queen's death with a national day of mourning on Sept. 19. BC Premier John Horgan followed suit a few hours later noting that the province has "advised provincial public-sector employers to honour this day in recognition of the obligations around federal holidays in the vast majority of provincial collective agreements."

The unplanned closure of schools and public offices will have an impact on many businesses. Staffing could be challenging as parents scramble to arrange child care. People who had appointments booked will also face disruption as they need to reschedule for a later date.

In Greater Victoria, the province is planning to host a procession on Sept. 19, starting at 10:15 am, and travelling from the BC Legislature to Christ Church Cathedral.

The belief that prices will keep rising can become self fulfilling as markets react to public expectation. To try and put an end to that, the Bank of Canada increased interest rates by 75 basis points Wednesday.

"Surveys suggest that short-term inflation expectations remain high," the Bank of Canada stated in its news release. "The longer this continues, the greater the risk that elevated inflation becomes entrenched."

Rising inflation has been the story of the summer, with fuel costs and global supply chain disruption causing the Consumer Price Index to reach 8.1% in June. Since then, the CPI has dropped though other indicators remain concerning.

To help understand what inflation and interest rates mean for Greater Victoria businesses, check out our special expert panel facilitated by Chamber CEO Bruce Williams.

Canada's inflation rate was 7.6% in July. That's down slightly from the month earlier but still creates many challenges for businesses. Common questions include how much cost can be passed on to customers, and should wages be increased accordingly?
 
To try and answer some of these, and to shed some light on the role interest rates play in managing inflation, I hosted a special panel of financial experts:

• Chris Yuan, Associate Wealth & Investment Advisor (RBC)
• Jared Heimsoth, Director, Capital Markets (CIBC)
• Kevin Greenard, Senior Wealth Advisor and Portfolio Manager (Scotiabank)
• Manny Del Dago, Senior Wealth Advisor (Island Savings)
• Susan Mowbray, Partner, Consulting (MNP)

The discussion was informative and enlightening. I encourage every Chamber member who wants to better understand what's happening with the economy to watch the recording of our conversation. I know it helped me, especially as there are reasons for optimism that aren't always reflected in the media. We're lucky to have Chamber Champions who continue to help us get through every challenge that arises.
 
Thank you,
 
Bruce Williams
CEO, The Chamber

As a globally connected nation, Canada depends on reliable international supply chains to make sure businesses have the goods needed for their customers. The pandemic and last year's series of climate emergencies provided tough lessons in the importance of building resiliency in our supply chains. To better prepare for future shocks, the federal government created the National Supply Chain Task Force.
 
"The Task Force is to report to government within 100 days, which is fast approaching," states a news release from the Canadian Chamber of Commerce. "As the Task Force finalizes its interim report, the business community is looking for a partner to address the preventable items hindering our transportation systems."
 
The chamber network is calling on the federal government to prioritize infrastructure and economic growth. In Greater Victoria, we are part of the Western Gateway for goods entering Canada and the Greater Victoria Chamber continues to call for investment in infrastructure on the Island.

Fueled by surging gas prices, Canada's inflation rate rose again last month to 8.1%. If the cost of gas is taken out, the rate would be 6.5%.
 
Other factors contributing to our higher cost of living include jumps in grocery bills, accommodation and ticket prices for sports and concert events. If there is a silver lining it is that the increase was less than expected. Whether this signals peak inflation is unclear. Many experts are forecasting inflation to begin falling in the next few months.
 
The Chamber is working with a number of members to get a clearer picture of what rising rates mean for business. Watch for updates in future editions of BizNews.

The Bank of Canada raised its interest rate by half a point Wednesday morning, after higher than expected inflation in April. The move was expected as global economies continue to face challenges. In simplest terms, the economy continues to struggle with supply challenges and is not able to meet demand for goods and services. The result has been rampant inflation, making the cost of living less affordable.
 
"With the economy in excess demand, and inflation persisting well above target and expected to move higher in the near term, the Governing Council continues to judge that interest rates will need to rise further," the Bank of Canada said in a June 1 media release. "The pace of further increases in the policy rate will be guided by the Bank’s ongoing assessment of the economy and inflation, and the Governing Council is prepared to act more forcefully if needed to meet its commitment to achieve the 2% inflation target."
 
The increase by the bank will mean higher costs for borrowing and will affect the housing market and some business's ability to make investments in their operations.

Inflation crept higher in March as Canada's Consumer Price Index was 6.7% higher than March last year. All eight categories that are tracked by Statistics Canada increased in cost as the CPI recorded its largest increase since 1991, the year the Goods and Services Tax was introduced.
 
The cost of filling up at the pump was one of the key factors, as was higher hotel rates and the cost of housing in general. Fuel is a factor in shipping and transportation costs so the jump in gas prices results in higher bills for food, furniture and other goods.
 
The war in the Ukraine has significantly reduced the supply of oil and gas driving up prices. However, the lifting of pandemic restrictions has also increased demand for many services as people seek out in-person experiences.

Surging fuel costs are adding to the ongoing inflation pressures facing businesses.
 
Prices hit a high of 216.9 cents per litre yesterday in Sooke, caused by global uncertainty from the war in the Ukraine.
 
The increase is having a particularly hard impact on couriers and transportation companies, and will lead to higher prices for customers.
 
The Chamber is working with our partners across BC to advocate for help. For every litre of regular gas, Greater Victoria residents pay 30 cents in provincial taxes and more than 15 cents in federal taxes. The biggest cost affecting the price at the pump is the cost for crude (about half the total price), which is what has risen because of Putin's invasion.
 
BC's Public Safety Ministry said Monday it will not follow Alberta's lead and cut provincial fuel tax.
 
One idea The Chamber is looking at is calling for a carbon tax exemption for companies that transport goods or passengers. The idea being that these businesses help take single driver vehicles off the road and should be encouraged.
 
To find the lowest gas prices in the region, go to gasbuddy.com.