The fight against inflation is working as the Consumer Price Index for February was down 5.2% year over year. That compares to 5.9% in January and is the largest deceleration since April 2020. Lower costs at the pumps and for home energy helped lower the CPI, while the cost of groceries remains high as supply constraints and weather-related production issues is adding to the cost of food.
The global economy is getting back to normal but there's still a ways to go, says the Canadian Chamber of Commerce Chief Economist Stephen Tapp.
"In this context, the latest Canadian Survey on Business Conditions shows that costs and labour issues remain the biggest near-term obstacles for Canadian companies," Tapp said the Q1 2023 Canadian Survey on Business Conditions Report. "Even as higher interest rates slow demand, there are a few bright spots. First, while long-standing supply-side bottlenecks for the workforce and supply chains remain elevated, they have eased in recent surveys. This might be
because businesses are taking proactive steps to address these problems, such as raising wages, embracing flexible work options and working with suppliers. Second, while the near-term outlook for sales is clearly subdued, all things considered, most companies remain optimistic about the year ahead, especially larger firms and those in services."
The end of Flower Count is a good sign that patio season is right around the corner. Last week, the hard work of business and industry associations was rewarded when the provincial government announced it was giving businesses more time to make outdoor seating permanent. The deadline has been extended to Dec. 31, 2024.
During the early days of the pandemic, many restaurants, pubs, bars and breweries found innovative solutions to create safe spaces for customers. These outdoor areas were well received by the public and helped economic activity thrive. To support the efforts of business, the province provided temporary expanded service area (TESA) authorizations to thousands of liquor-licensed businesses.
“Many licensees have not applied to make their TESA permanent due to the stress and pressure as a result of the effects of the pandemic and the unprecedented labour shortage," BC Restaurant and Foodservices Association president and CEO Ian Tostenson said. "We would like to thank government for being conscious of this and providing the much-needed extension.”
Meanwhile, the CIty of Victoria will have to decide tomorrow, March 16, how it will proceed with its new Patio Regulation Bylaw. The bylaw updates the emergency measures implemented during the pandemic to provide more municipal oversight. City staff have been engaging with businesses and neighbourhood groups to develop its rules before the provincial TESA program was originally supposed to end. Now that an extension has been granted, the City should have more time to ensure its changes are workable for businesses.
As expected, the Bank of Canada held off on changing its target interest rate. The move signals that efforts to curb inflation are working. The forecast is for inflation to keep falling and reach 3% by summer. Statistics Canada will provided its next update on the Consumer Price Index on March 21.
BC Budget 2023 addresses symptoms of unaffordability but offers little help for business
Yesterday, the 2023 budget was released with a focus on addressing many of the symptoms of unaffordability affecting British Columbians. However, there was a lack of new investment aimed at improving the province’s business climate.
The Chamber is traditionally the first business association to host the finance minister after the unveiling of the province's annual budget and BC Finance Minister Katrine Conroy addressed more than 100 business and community leaders today at the Hotel Grand Pacific.
Among the highlights of BC Budget 2023 are $1 billion in new money for mental health and addiction services, new funding to improve food security and the $480 million Future Ready Plan, which will help employees gain the skills needed by employers.
The province is forecasting deficits for the next three years but has chosen to increase spending this year.
Minister Conroy said global inflation and the lingering effects of the pandemic are contributing to systemic challenges that make life less affordable for British Columbians.
In the next 30 days, the $3.6 billion surplus left over from last year needs to be spent and will be used for a number of projects currently in the works. Details of that spending will be made available in the coming weeks.
“The Chamber has heard from our members that they need help finding and keeping workers, and they want more done to ensure safe communities for all,” Chamber CEO Bruce Williams said, noting there are also annual increases to the Carbon Tax, which will add to the cost of doing business. “This budget will help by addressing symptoms of unaffordability through the renter’s tax credit, school food programs and a significant increase to healthcare funding. It’s a start but we would have liked to see BC Budget 2023 give a higher profile to the role business plays in improving the quality of life for all British Columbians. Businesses are the ones who make the investments needed to build resilience and create real solutions to affordability.”
As expected, the Bank of Canada bumped up its policy interest rate by a quarter point while signalling no further moves are planned until the impact on the economy can be more fully assessed.
"Inflation is projected to come down significantly this year," a media release from the Bank stated. "Lower energy prices, improvements in global supply conditions, and the effects of higher interest rates on demand are expected to bring CPI inflation down to around 3% in the middle of this year and back to the 2% target in 2024."
The Bank of Canada has hiked its rate eight times in less than a year. The moves have slowed business investment and dampened consumer confidence, adversely affecting most business sectors.
"We've been checking in with our members during this time and I know it's been difficult for many people facing higher costs," Chamber CEO Bruce Williams said. "We're focused on supporting members as we can, helping them build resiliency in their organizations while calling for smart investments from government so that our regional economy can come back stronger than ever."
Inflation makes the cost of doing business more expensive and inhibits investment, which is why the recent data from Statistics Canada is welcome news.
The Consumer Price Index rose 6.3% year over year in December, down from a 6.8% increase in November. Excluding food and energy, prices rose 5.3% on a yearly basis in December, compared to 5.4% in November.
Canadian Chamber Economist Mahmoud Khairy said the drop might not be enough to keep the Bank of Canada from one more increase to interest rates later this month. Khairy expects rates to rise by a quarter point, to 4.5%, and end the tightening cycle which began last March.
Meanwhile, the Bank of Canada released its latest Business Outlook Survey on Monday. It found that the rise in interest has dampened sales forecasts as customers have less spending money available after paying for necessities. The Bank also released its survey of Consumer Expectations on Monday, showing that many people still fear a recession despite stronger than expected job numbers.
Could this be the end of interest rate increases? The Bank of Canada increased its rate today to 4¼%, but softened the language it uses around future increases.
A statement from the bank said the bottlenecks that had been affecting global supply chains are loosening.
The Consumer Price Index was at 6.9% in October, though core inflation was 5% — much closer to the bank's target of 2%.
"Three-month rates of change in core inflation have come down, an early indicator that price pressures may be losing momentum," the bank stated. "However, inflation is still too high. The longer consumers and businesses expect inflation to be above the target, the greater the risk that elevated inflation becomes entrenched."
Make sure to consult with your preferred financial and mortgage advisors —The Chamber's Member Directory is a great place to find experts who can help you make your business thrive.
Greater Victoria continues to have one of the tightest labour markets in Canada. The latest numbers from November show our unemployment rate is back to 3.5%, according to Statistics Canada. That's down from 4.3% in October and closer to where the region typically was before the pandemic.
"We know there is work in our region and that makes us attractive to ambitious people who want to move here and build their careers," Chamber CEO Bruce Williams said. "Our regional economy benefits from having the stability of BC government jobs as well as CFB Esquimalt. However, we still need to address housing supply in Greater Victoria to make sure we can retain people who want to work here and contribute to our community."
There is some good news on that front as new construction jobs appear to be driving the lower rate. There were 18,400 people employed in construction this November compared to 13,500 in November 2021.
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.
We Remember those who gave everything
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:
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.
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.