Statistics Canada reported on Tuesday, October 17, 2023, that the rate of increase of inflation has lowered from 4.1% to 3.8%. According to their report, “deceleration in the cost of living was “broad-based” and stemmed from lower prices for a variety of goods and services, including travel, durable goods and some grocery items.” According to this data agency, the cost of living dropped by an unimpressive 0.1% in September 2023. This is the first time that has occurred since November 2022, a small sliver of hope.
Grocery prices continue to increase, despite grocery chains being accused of price gouging their customers as inflation rose in 2022. Indeed, in 2017, Loblaws and Weston Bakeries admitted guilt for price-fixing the cost of bread for the previous 14 years and implicated several other large conglomerates including Walmart & Canada Bread. While the rate of increase seen at the counter is much slower than it was previously in 2022, it has been consistently around 5.8% year over year.
In the interest of abating the financial struggles Canadians have been enduring for the past three years since Covid lockdowns, the Federal Government has increased interest rates to slow the economy down, assuring citizens that the increase will ease inflation and the increase in the cost of goods it brings. Over the last year, Canadian taxpayers have been burdened with sky high prices on goods and services accompanied by historically moderate interest rates, thus encouraging them not to spend or borrow.
Looking at Canada on the global stage financially, it was only three weeks ago Trudeau committed yet another instalment of Canadian tax money to the war in Ukraine. In September 2023, he pledged an additional $650 Million bringing the total amount of “aid” to more than $950 Billion total since the beginning of 2022. Money acquired from Canadian taxpayers that is donated to other countries means that the Federal Government needs to borrow more money to fulfil their ‘aid’ promises while continuing to fund the budget here at home. Borrowing and/or printing additional money increases inflation and the cost of goods, with taxpayers paying more taxes and more for groceries, gas etc to fund the Government’s spending decisions.
On a positive note, Jay Zhao-Murray, a foreign exchange analyst with Monex, indicated that the inflation number will be significant to the Bank of Canada, which controls monetary policy and decides whether rate hikes are needed in future.
“Today’s report is perhaps the best news that the Bank of Canada has received in months, he said, noting that everything from food to energy to goods and core inflation all declined during the month, while costs for services were flat.”
His bet is that “the Bank of Canada will likely take confidence in today’s report and hold rates steady at five per cent at next week’s meeting.” According to a recent article in the CBC, “Zhao-Murray said he expects core inflation to continue to trend lower, as there is more and more evidence that consumers are cutting back. Spending on things like recreation and restaurants is trending lower, and they’re also less willing to spend on goods than they are on services, which is a sign that they “have cut back on discretionary spending to protect themselves.”
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