Posthaste: Inflation numbers not all doom and gloom for some economists
'One should not be overly influenced by the volatile monthly movements'
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Posthaste: Inflation numbers not all doom and gloom for some economists Back to video
Good morning!
The latest inflation numbers were a real downer.
Overall inflation was down 0.1 percentage points in September to 6.9 per cent year over year, from seven per cent in August, but that reading was a bit of a letdown considering analysts surveyed by Bloomberg were expecting a reading of 6.7 per cent.
If the consumer price index (CPI) was down, mostly thanks to a 7.4 per cent drop in gas prices, the core CPI was up practically everywhere else: from mattresses to cars and tuition to mortgages. You name it, costs rose last month, causing the core reading to rise to 5.4 per cent.
Amidst all this gloomy data, a few economists said there may be some glimmers of hope that inflation will soon release consumers from its angry grip. But we’ll have to avert our eyes from those dastardly monthly releases first.
“One should not be overly influenced by the volatile monthly movements and perhaps look at the recent trend which remains encouraging for the Bank of Canada,” National Bank of Canada economists Matthieu Arseneau and Alexandra Ducharme said in a note following the release of inflation data on Wednesday.
The trends they are referring to are that headline inflation of 7.2 per cent for the third quarter came in well below the Bank of Canada’s projections in July of eight per cent.
They also reference the “risk” that the economy will expand less on a quarterly basis than the annualized rate of two per cent the central bank forecast back in the summer. A cooler economy could translate into less demand and less pressure on the price of goods.
Arseneau and Ducharme said this adds up to “less acute price pressures in the coming months” and less pressure on the central bank in the rate-hiking department.
The National Bank team isn’t alone in reaching for a silver lining.
“The recent trend in the CPI monthly changes suggests that inflationary pressures are losing momentum,” Charles St-Arnaud, chief economist at Alberta Central, said in a note.
He said most components of the CPI are now below their year-over-year changes on a three-month annualized basis, so “inflationary pressures may be close to peaking,” except for food.
If a lot less optimistic than his fellow economists, Douglas Porter at the Bank of Montreal took some solace in Canada’s inflation readings being nowhere near those of the United Kingdom, United States and the eurozone.
The U.K. broke the double-digit barrier, with the Office for National Statistics on Wednesday announcing inflation of 10.1 per cent for September. Inflation is at 8.2 per cent in the U.S. and 9.9 per cent in the EU.
“Still, inflation (in Canada) remains more than double last year’s average pace,” Porter said.
The National Bank’s Arseneau and Ducharme also like that Canada is ahead of the game compared to the U.S., noting there has been “a significant divergence in core inflation between Canada and the U.S. over the past three months.”
Of course, with 2022 entering the homestretch, consumers will likely have to wait until 2023 for inflation relief.
“The global slowdown, less acute supply chain issues and lower transportation costs should translate into weak good inflation prints going into 2023,” said the pair.
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KNUCKLES RAPPED The federal Commissioner of Competition has accused Rogers Communications Inc. and Shaw Communications Inc. of “abuse of process” and conducting a “fishing expedition” by serving subpoenas on rival Telus Corp. demanding documents “on the eve” of a Nov. 7 hearing into the Competition Bureau‘s challenge of the two companies’ proposed $26-billion merger. “The subpoenas describe documents in broad, sweeping terms and would only serve the purpose of fishing in hopes of finding relevant information,” says an Oct. 17 filing made public late Tuesday by the Competition Tribunal, which will hear the Competition Bureau’s challenge of the merger beginning next month, writes the Financial Post’s Barbara Shecter. Photo by Evan Buhler/The Canadian Press
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- Marc Miller, minister of Crown-Indigenous relations, will announce funding for the Native Women’s Association of Canada for a project that helps Indigenous women and Two-Spirit and gender-diverse individuals find apprenticeships with small and medium-sized enterprises
- The parliamentary budget officer will post a legislative costing note entitled “Canada dental benefit” on the website at pbo-dpb.ca
- The Senate committee on energy, the environment and natural resources will hear from Jerry DeMarco, the commissioner of environment and sustainable development, as part of its study on emerging issues related to the committee’s mandate (hydrogen energy)
- The standing committee on national defence meets regarding Arctic security
- The standing committee on official languages meets about Bill C-13, An Act to amend the Official Languages Act, to enact the Use of French in Federally Regulated Private Businesses Act and to make related amendments to other Acts
- Corey Tochor, Conservative MP for Saskatoon-University and associate shadow minister for natural resources (nuclear); and Chris Keefer, president of Canadians for Nuclear Energy, will hold a media availability. They will be discussing the importance of a bold and enthusiastic vision for Canadian nuclear energy and uranium for the security of Canada and to protect the environment
- The Senate committee on banking, commerce and the economy will hear from Mark Carney, vice chair of Brookfield Asset Management Inc. and head of transition investing and former governor of the Bank of Canada, on the state of the Canadian economy and inflation. Following Carney’s testimony, the committee will hear from Steve Hanke, professor of applied economics, Johns Hopkins University
- Taylor Bachrach, NDP MP for Skeena—Bulkley Valley; and Alexandre Boulerice, NDP MP for Rosemont—La Petite-Patrie, will call for more protections and rights for railway workers
- The standing committee on government operations and estimates meets regarding a national ship building strategy and the ArriveCan application
- The standing committee on industry and technology meets regarding Bill C-235, An Act respecting the building on a green economy in the Prairies
- Karina Gould, minister of families, children and social development, will speak about recent child care fee reductions as part of the Canada-wide early learning and child care system and promote the benefits to parents and providers of signing on to the Canada-Ontario Canada-wide Early Learning and Child Care Agreement
- Alberta Premier Danielle Smith speaks to the Edmonton Chamber of Commerce
- Prime Minister Justin Trudeau will participate in a roundtable discussion on affordability in Vancouver
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Today’s data: Canadian employment insurance, Teranet/National Bank home price index for September; U.S. existing home sales for September, U.S. initial jobless claims, Philadelphia Fed Index
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Earnings: AT&T Inc., Philip Morris International Inc., Dow Inc., Nokia Corp., Snap Inc., American Airlines Inc.
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- ‘Difficult days ahead:’ Chrystia Freeland warns slowdown coming for Canada’s economy
- OSFI keeping close watch on mortgage lenders as rates rise, home prices cool
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- Here’s who’s investing in cryptocurrency in Canada
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Statistics Canada’s consumer price index, the country’s main inflation gauge, increased 6.9 per cent in September from a year earlier, compared with seven per cent the previous month, suggesting inflationary pressures are receding, albeit slowly.
However, that snail’s-pace slowing isn’t enough for the Bank of Canada’s liking, writes Kevin Carmichael.
Read the full story here.
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If you’ve been watching your mortgage payments go up this year, wondering when the increase will end, you are not alone. In the past, variable-rate mortgage holders saved more money than those who went with a fixed-rate mortgage. That’s because they were able to take advantage of long periods of lower interest rates. While that may have been true, there are many homeowners currently on a variable-rate mortgage that have felt the squeeze as the Bank of Canada has increased interest rates. And it isn’t likely to let up anytime soon. Barry Choi of our content partner MoneyWise helps you decide whether it’s time to lock in your mortgage.
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Today’s Posthaste was written by Gigi Suhanic (@gsuhanic), with additional reporting from The Canadian Press, Thomson Reuters and Bloomberg.
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