1) Canada’s inflation rate cools to 3.1% but the cost of living keeps going up:

November 21, 2023

Courtesy CBC: https://www.cbc.ca/news/business/canada-inflation-october-1.7034686

Gasoline prices the biggest reason for the deceleration

Canada’s consumer price index rose by 3.1 per cent in the year up to October, down from 3.8 per cent the previous month but in line with what economists were expecting.

Statistics Canada reported Tuesday that the biggest reason for the deceleration in the cost of living was a drop in the cost of gasoline, which declined by 6.4 per cent during the month of October alone, and is down by 7.8 per cent compared to where prices were a year ago.

If gasoline is stripped out of the numbers, the inflation rate would have been 3.6 per cent in October. That’s slightly lower than the 3.7 per cent non-gasoline inflation rate clocked the month before.

Food prices increased at a 5.4 per cent pace over the past year. While that’s still higher than the overall inflation rate, it’s down from the 5.8 per cent annual pace seen in September.

Grocery prices have now decelerated for four months in a row, but as TD Bank economist Leslie Preston noted, consumers can be forgiven for not really feeling any tangible relief at the checkout line.

“Slower growth in prices may be imperceptible to consumers who are still paying more than 20 per cent more for a basket of groceries relative to three years ago — the biggest such increase in 40 years,” she said.

While the pain at the cash register for staples like food and gasoline is getting comparatively better, plenty of other aspects that contribute to the cost of living continue to increase at an eye-watering level.

Overall, shelter costs are up by more than six per cent in the past year. That’s about twice the overall inflation rate.

A big reason for that is rent which keeps going up at its fastest pace in years. The data agency says the typical cost of rent went up by 8.2 per cent in the past year. That’s up from 7.3 per cent in September.

The costs associated with owning are no better, however, with mortgage interest costs up by more than 30 per cent in the past year. And property taxes increased by 4.9 per cent in the past year. That’s up from 3.6 per cent this time last year, and it’s also the biggest one-year increase in property taxes on records dating back to 1992.

• ANALYSIS: Inflation is cooling. The cost of living crisis is not

If one were to strip mortgage costs out of the numbers, the inflation rate would be 2.2 per cent and if one were to strip out shelter entirely, it would be 1.9 per cent.

Economist Tu Nguyen with consultancy RSM Canada Inc. says the shelter costs are eating a larger and larger chunk of household budgets, leaving less money for everything else and bringing down inflation in the process.

“On a per capita basis, consumer spending has actually dropped,” she said. “Households who get hit with higher mortgage payments find themselves cutting back on discretionary spending.”

She says the data give the Bank of Canada more than enough of an excuse to stop any further rate hikes.

“The CPI report is the latest sign of a cooling economy that should make the Bank of Canada feel comfortable keeping the policy rate unchanged at the December announcement. At this point, the Bank can sit back and let the forces of monetary policy work its way through the economy.”

ABOUT THE AUTHOR

Pete Evans, Senior Business Writer

Inflation, Longer Sales Season To Weigh On Shopping Habits This Black Friday

The Average Canadian Shopper Will Spend $1,347 This Holiday Season, Down 11% From Last Year

Courtesy of Barrie360.com and Canadian PressPublished: Nov 24th, 2023

Tara Deschamps, The Canadian Press

As scores of shoppers pack local malls to hunt for Black Friday deals, Dianne Debarros will be on the lookout for discounted toys and laptops her kids will soon need for school.

The Sarnia, Ont., woman has already started her Christmas shopping but wants to supplement her purchases on a trip to Real Canadian Superstore, where the chain is doling out loyalty program points in exchange for $100 in purchases in some of its departments.

“I feel like the last couple of years, the sales, and the prices weren’t very good, but this year the prices seem to be reasonable, and the incentives are there,” Debarros said. She and her partner, Tom, run a deal−hunting social media account on Instagram and TikTok.

The annual wave of discounts, door-crashers and sales timed to the holiday season will be especially welcomed by Canadians who are feeling stressed about money this year. 

Inflation remains above the Bank of Canada’s two per cent target, keeping prices high for household goods and big-ticket purchases, even as higher interest rates are causing many homeowners’ mortgage payments to balloon.

The confluence of factors is encouraging more Canadians to seek deals and even pare back their holiday spending.

Deloitte predicts the average Canadian shopper will spend $1,347 this holiday season, down 11 per cent from last year.

Roughly half of the more than 1,000 Canadians the consultancy company surveyed plan to buy only what their family needs this holiday season. Seventy-one cent will seek items on sale and 29 per cent will seek less expensive retailers to shop at.

“Canadians are looking to really stretch their dollar,” said Debarros.

Together, the couple doles out advice on how to save money on shopping trips — making Black Friday a prime time of year.

However, the day wasn’t always one of the biggest shopping occasions.

Its origins date back to the 1960s, when people would flock to Philadelphia near U.S. Thanksgiving and an annual army football game hosted in the city. Police reportedly had to work long hours and cope with an influx of sometimes rowdy visitors, inspiring them to begin calling the period Black Friday.

Retailers — hoping to lure in customers — eventually adopted the name and started using the date to offer sales. Over time, Black Friday sales spread across the country and, in more recent years, to Canada.

Now, it’s so routine for stores to offer Black Friday sales that many have extended the practice through the month of November.

But some argue the lengthier nature of the sales period has made the day itself less important to Canadians.

“The Black Friday day has lost its lustre,” said Nick Muriella, vice−president of merchandising and supply chain at Toys “R” Us Canada.

His observation came a week before Black Friday. By then, many stores had already been offering sales since the start of November, so he concluded Black Friday has “just become another way to say sale.”

Staples Canada began its sales on Nov. 1 because it noticed consumers shopping earlier.

“They’re really trying to not leave it last minute,” said Rachel Huckle, the retailer’s president and chief operating officer.

“What we’ve heard from many customers is that when they’ve left it last minute, they’re usually rushing and as a result, they’re making maybe decisions that they wouldn’t have made from a certain price point out of, frankly, desperation.”

To alleviate some of that rush, the chain introduced guarantees that some of its products will not see their prices drop further this holiday season, so shoppers can have confidence in their purchases.

Despite the elongated sales and the guarantee, Huckle still expects to see people pack her company’s stores on Black Friday because many will see it as the day they ramp up their shopping.

Others, she said, will be “creatures of habit.”

“I still think we’re going to have those that are last minute, that will still continue to shop throughout the season.”