The Consumer Price Index rose 4% year over year in August, Statistics Canada reported this week. That's up from a 3.3% increase in July.
"In addition to facing higher energy prices, Canadians paid more for rent and mortgage interest in August," Statistics Canada said. "Moderating the all-items CPI were declines in prices for travel-related services and a smaller increase in food prices compared with the previous month." The rise in inflation could impact the Bank of Canada's next interest rate decision. In a summary of deliberations, released today, the Bank noted that they had concerns about pausing rate increases last month. The Bank said it needs to make sure Canadians aren't expecting interest rates to be lowered soon, and that there is still a risk of ongoing high inflation. The Bank of Canada announced this morning that it was holding its interest rate at 5%, as expected. The next announcement is Oct. 25.
The Bank's Governing Council said there are signs that supply is catching up to demand, and it is still assessing how previous rate hikes are affecting the economy. "However, Governing Council remains concerned about the persistence of underlying inflationary pressures, and is prepared to increase the policy interest rate further if needed," said the news release issued by the bank. The pause comes as political pressure increases to stop raising rates, though the Bank has been clear it's committed to restoring price stability for Canadians and does not make decisions based on government requests. "I know a lot of our members are affected by increasing costs caused by inflation and higher interest rates," Chamber CEO Bruce Williams said. "It's not an easy time, but we're also seeing investments in more efficient operations and a focus on sustainability that will make our community more resilient in the long run." The provincial government announced today that it received more revenue than expected for fiscal 2022-23.
Public Accounts show B.C. ended the year with a $704-million surplus and no operating debt, helped in part by income tax generated by high employment. BC Minister of Finance Katrine Conroy, who spoke to Chamber members on March 1, said investing in people and businesses is paying off. “We’ve seen time and again that when we invest in people and the services they count on to build a good life here, it makes our economy stronger and more resilient,” Conroy said in the news release, which also noted that BC has the lowest debt-to-GDP ratio in Canada. The Chamber will continue to work with decision-makers in all levels of government to reduce the tax burden faced by business, while also calling for smart investment. "These revenue figures show that the province clearly can do better at reducing costs borne by businesses, such as the Employer Health Tax," Chamber CEO Bruce Williams said. "The best investment any government can make is creating the right climate for entrepreneurs and businesses, who drive the majority of employment in BC." The next report on provincial finances will be the first quarterly report for 2023-24 in September. Inflation is running hot in Canada, though the relationship between higher prices and the likelihood of the Bank of Canada raising rates is "complicated." The rate was 3.3% in July compared to 2.8% in June. Some of the higher costs are directly related to interest rates, which make some mortgages and loans more expensive and impacts renters as well as homeowners. The summer heat also caused energy demand to soar, and the war in the Ukraine continues to impact food prices worldwide.
The Bank of Canada has been clear that tamping down inflation remains its priority. That means another raise in interest rates remains on the table next month. However, the Conference Board of Canada reports that inflation could be feeding on itself as consumers and businesses have come to expect prices to keep rising. How is your organization dealing with cost uncertainty? Share your stories or advice for other businesses at communications@victoriachamber.ca. The blue skies of summer appear to reflect the sunny disposition of spenders, according to July's Consumer Confidence Index.
The Conference Board of Canada reported an increase of 5.5 points over the previous month. The long range outlook was more moderate, though it seems a majority of Canadians are hopeful that better economic times are ahead. In BC, consumers were buoyed by the provincial benefits handed out to more than two million people. The climate tax credit and increased family benefit helped individuals facing higher costs due to inflation. "We encourage everyone who has been helped by these benefits to remember the importance of helping local business," Chamber CEO Bruce Williams said. "Investment in the economy works by supporting the people in our community who provide the goods and services we all rely on." Everyone concerned about the cost of borrowing could be forgiven for feeling a bit of relief yesterday with news that inflation is slowing faster than expected.
Statistics Canada's Consumer Price Index for June was 2.8%. That's less than had been forecast and closing in on the Bank of Canada's target rate of 2%. However, the Canadian Chamber points out that there's more to the number than meets the eye. "Unfortunately, the stickiest and hardest part of the inflation fight is only just beginning," Chamber Senior Research Director Marwa Abdou said, noting that energy costs account for much of the drop. "We may have to get used to tight monetary policy (from the Bank of Canada), as the lagged effects of previous actions work their way through the economy." It's been far from a smooth process bringing an end to the strike affecting Canada's Western ports. The "off again on again" strike created a significant disruption to supply lines on the Island and across the country.
The strike has kept $9.9 billion worth of goods from flowing smoothly from the ports to businesses and consumers, according to the Greater Vancouver Board of Trade. "Every day that the strike is going adds to the uncertainty that many businesses are feeling," Chamber CEO Bruce Williams said. "I spoke with a number of chamber members and we are concerned for smaller businesses that don't have large warehouses to store inventory. Many of these businesses rely on efficient shipping to get specialty foods, parts or items based on current demand. It's also a stressful time for businesses that rely on the ports for exports. Hopefully the backlog caused by the strike will clear up as soon as possible." Last Thursday, The Chamber hosted Bank of Canada Deputy Governor Paul Beaudry for the unveiling of the Bank's Economic Progress Report at the Victoria Conference Centre. Two hundred business and community leaders were at the event, sponsored by Odlum Brown, the City of Victoria and Grant Thornton.
Beaudry's speech and Q&A session with Chamber CEO Bruce Williams offered fascinating insight into how the bank decides on raising interest rates. "On behalf of all Chamber members and our board, I'd like to thank Deputy Governor Beaudry for taking the time to speak with us," Chamber CEO Bruce Williams said. "He was able to answer some of the questions on the minds of many members, and many Canadians judging by the widespread media coverage Victoria received because of this event." The speech was followed by a press conference that was attended in-person by local media as well as virtually by financial journalists across the country. The situation is still uncertain for Vancouver Island communities that have had their main transportation routes cut off by wildfire.
Highway 4, connecting Tofino and Ucluelet with Port Alberni and the rest of the Island, remains closed after fire burned more than two square kilometres of forest along the route. "Right now, our thoughts are with everyone in those Island communities," Chamber CEO Bruce Williams said. "The alternate routes are for essential traffic only. They're needed to ensure supplies and emergency personnel can get through. So we're working with our friends at 4VI to encourage people who had planned trips to impacted communities to consider other Island destinations that remain open." Yesterday, the Alberni Valley Chamber of Commerce relayed that they're trying to stay optimistic. However, businesses will be challenged until they are able to fully reopen. “(We're) really pleased to hear that the fire is now being held, so that gives some businesses time to arrange for alternative arrangements for things coming in, but this is definitely going to be hard on the community,” Alberni Chamber CEO Jolleen Dick told CHEK News. Recent good news about a strong economy and job market is bad news for the fight against inflation. That's the message from the Bank of Canada, which raised its interest rate today to 4.75%.
"Consumption growth was surprisingly strong and broad-based, even after accounting for the boost from population gains. Demand for services continued to rebound. In addition, spending on interest-sensitive goods increased and, more recently, housing market activity has picked up," the bank said in a news release. "The labour market remains tight: higher immigration and participation rates are expanding the supply of workers but new workers have been quickly hired, reflecting continued strong demand for labour. Overall, excess demand in the economy looks to be more persistent than anticipated." What that means for Greater Victoria's economy, and whether a recession is unavoidable will be hot topics tomorrow, when the bank's Deputy Governor Paul Beaudry speaks at a Chamber Business Leaders Luncheon. What is going on with Canada's economy? Talk of a looming recession has been ongoing for months, but the latest GDP figures released today by Statistics Canada show the economy grew faster than expected. The economy grew at a rate of 3.1% in the first quarter, after Statistics Canada had been forecasting an increase of 2.5%.
The news comes one week before the Bank of Canada's next interest rate announcement. The pace of growth has some experts now wondering if we can expect a further rate increase. Victoria business leaders will have the opportunity to hear directly from the Bank of Canada, as The Chamber hosts the release of the Bank's Economic Progress Report the day after the rate announcement. Statistics Canada says household spending was up, specifically durable goods such as vehicles and clothes as well as travel. At the same time, investment in housing is down 3.9% with less new construction and renovations taking place across the country. Businesses are also investing less in machinery and equipment. The Consumer Price Index was 4.4% in April, more than twice the target rate of 2% that the Bank of Canada is working to achieve. The province received some welcome news about its financial state of affairs when Moody's reaffirmed BC's AAA credit rating on May 17. Moody's is the last credit agency to release its results. In April, Fitch Ratings maintained its AA+ rating for the province, while S&P Global Ratings downgraded BC from AA+ to AA. On May 1, DBRS Morningstar kept BC at AA(high).
Moody’s noted British Columbia’s attractiveness to businesses and individuals, as well as migration into the province. Good credit ratings are vital for the province to get competitive rates on borrowing for infrastructure projects and service demands. BC has the highest credit rating among Canadian provinces across the four agencies. Tables are selling fast for the upcoming chance to attend in-person the Bank of Canada's Economic Progress Report in Victoria.
The Greater Victoria Chamber of Commerce has secured the Victoria Convention Centre to ensure we have a large enough facility to meet anticipated demand for our June 8 event. The last time the Bank spoke live in Victoria, a sold-out Crystal Garden was filled with business and community leaders who had high praise for the experience. "Our event is the day after what could be a crucial rate announcement, and we know many will want to better understand how the Bank makes its decisions," Chamber CEO Bruce Williams said. "It's not easy to secure an event of this importance. Business people across the country will have their eyes on Victoria, and it's pretty cool that we get to experience it in-person." The Economic Progress Report will be broadcast live on. A press conference for national media will take place after the speech and Q&A session with Deputy Governor Paul Beaudry. Big decision looms for Bank of Canada With the next announcement on interest rates set for June 7, there are mixed opinions on what the bank will do. Some analysts are calling for another rate hike to help mitigate the risk of high inflation, while other market strategists say they don't forecast an increase next month. On May 18, the Bank of Canada's Financial System Review found three areas of concern in the economy. The next scheduled event, after the interest rate announcement June 7, is the Economic Progress Report speech in Victoria on June 8. Are you ready for the digital dollar?
The Bank of Canada is in the news this week, after announcing they're working on something called a central bank digital currency or a digital Canadian dollar. The Bank wants to be ready, though there are still plenty of questions to answer before it becomes reality. "If a digital Canadian dollar were issued, it would be money that every Canadian could use every day," Bank Governor Tiff Macklem said. A digital dollar wouldn't replace bank notes, and like paper bills, it would not accrue interest or change in value. If the federal government asks for a digital dollar, the Bank wants to be ready to issue the currency. They're asking Canadians for feedback through a survey running from May 8 to June 19. "I'm sure the topic of a digital dollar will come up on June 8, in what's shaping up to be a really exiciting and historic event for Victoria," Chamber CEO Bruce Williams said. The Chamber hosts the Bank of Canada's Deputy Governor Paul Beaudry as he delivers the next Economic Progress Report from Victoria. The reports earn national coverage and offer insight into the Bank's analysis of where the economy is heading. See more details under Upcoming Business Leaders Luncheons below. The latest report from the Canadian Mortgage and Housing Corporation shows an increase in new homes being built in Greater Victoria. That's good news, as The Chamber continues to advocate for changes to regulations and investment in strategies that increase housing supply. We need homes that are affordable to workers because Greater Victoria's employers desperately need employees.
CMHC numbers show housing starts in our region were up 32.6% year over year. There were 1,088 housing starts from January to March, compared to 820 starts for the same period in 2022. The report shows that most of the new starts are condos and apartments as fewer single detached homes are being built. The City of Langford accounts for 537 of the new starts. The City of Victoria is home to 240 new starts and the Township of Esquimalt has 157. It's too early to forecast whether the increase will be sustained over the course of the year, as high interest rates impact investment. The report is also an indicator that some municipalities in our region are not creating their fair share of housing supply. Recent initiatives by the provincial government could help unlock potential housing in these areas. If you enjoy understanding the policies behind decisions that impact our daily lives, you'll want to read the Bank of Canada's latest report released today. The Summary of Governing Council deliberations offers a glimpse behind the scenes of why the Bank chose to pause interest rate hikes on April 12.
The council expressed concern about public perceptions fueling higher inflation and, after discussion, chose to signal that though the rate is unchanged it could go up if needed. It's a fascinating read that offers great insight into why the cost of borrowing will remain high until inflation can be tamed. Good data used in the right way is critical to making sound business decisions. It's an advantage that many large organizations have had, though the cost of accessing the info has been a challenge for smaller businesses. Until now.
The Chamber is pleased to announce a new tool recently released by the Canadian Chamber of Commerce Business Data Lab. The Business Conditions Terminal was developed in collaboration with Statistics Canada, and is available to the public at no cost. More than 2,200 indicators from 30 different data providers are accessible through the terminal to deliver granular, real-time insights to businesses. “We’re helping Canadian companies unlock the power of better business data,” Canadian Chamber Chief Economist Stephen Tapp said. “Most small business owners are too busy running their businesses. They don’t have time to moonlight as forecasters or data scientists. They’re looking for easy to use, easy to understand data tools that quickly give them customized, actionable results for their local region and industry.” Stay on top of shifting economic conditions and better understand new trends as they emerge by utilizing the Business Conditions Terminal. Good news for everyone feeling the pinch of inflation. Statistics Canada's latest figures for the Consumer Price Index, released yesterday, show that costs are increasing at a slower pace than they have since August 2021.
"Year-over-year CPI growth fell sharply in March, which will likely bring relief to Canadian consumers and policymakers alike," the Conference Board of Canada said in a news release. "And the outlook for the Canadian dollar may be in better shape in the wake of banking turmoil in the United States. A stronger currency could insulate Canadians from higher import prices." The slowing rate is a sign that efforts by the Bank of Canada are working. The bank has used its tools to raise interest rates and discourage spending. The effort is expected to contribute to a short-lived recession in Canada this summer. The bank's forecast is for inflation to fall to 3% by mid-year before eventually getting back to its 2% target next year. Register Now: June 8 at Victoria Conference Centre Bank of Canada's latest Economic Progress Report Ahead of The Chamber hosting a high-profile visit from the Bank of Canada's Deputy Governor on June 8, there are signs that high interest rates have done their job.
This morning, the Bank of Canada announced it was holding its overnight rate at 4.5%. It's the second month in a row the rate has stayed the same after rising eight times since March 2022. The move suggests the bank is seeing the impact of higher interest rates reflected in cooling inflation. The bank is now forecasting inflation to drop to 3% by mid-year and slowly fall to the target rate of 2% by the end of next year. "Inflation in many countries is easing in the face of lower energy prices, normalizing global supply chains and tighter monetary policy," stated the bank's news release. "At the same time, labour markets remain tight and measures of core inflation in many advanced economies suggest persistent price pressures, especially for services." The bank will make its next rate announcement on June 7, followed by the release of its latest Economic Progress Report on June 8 in Victoria at an event hosted by The Chamber. See below for more information on this special Business Leaders Luncheon, sponsored by Odlum Brown. On Monday, the Bank of Canada released its Canadian Survey of Consumer Expectations as well as its Business Outlook Survey. Both are for the first quarter of 2023.
The surveys show that many Canadians are concerned about how high levels of government spending will impact inflation. Consumers are optimistic that costs will come down eventually but are reducing their discretionary spending for the time being. The survey found that low unemployment was giving confidence to workers, though there was some concern about the quality of jobs related to the quantity available. Businesses are planning for sales to grow at a slower pace than the exceptional growth many experienced in the past year. As supply chains continue to normalize, businesses said they expect the prices of their services and products to stabilize. The Chamber is thrilled to welcome the Bank of Canada's Deputy Governor to Victoria on June 8 to deliver the bank's next Economic Progress Report. See below for more information. 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.
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." |
Categories
All
|