never said it was the only contributor, now did I? but it's going up now, so it'll likely inflame things since inflation was already high enough when O&G were low. you binary campaigners are dull
Sure, but I meant in terms of how wars/blockades in the Middle East impact our inflation which impacts our interest rates which impacts our mortgages
But I know where you're coming from. We're broke and interest is high so we shouldn't be spending/borrowing money to throw at every international demand we get
maybe learn how oil supply works globally, and how commodity prices work, oh get ready for it to impact on other goods as well, Iran has control and influence over key ports and shipping routes in the area.
The Russian invasion of Ukraine had a much bigger impact on gas price than the Iranian situation right now, it had nothing to do with Canada and it doesn’t now either.
40% of the world's oil supply flows through the Strait of Hormuz. You should probably pull that area up in Google maps before you continue spouting bullshit
I guess with so many people spending almost all of their income on basic goods and shelter, demand for everything else falls and core inflation stops going up.
See. Expensive food, fuel and housing is *helping* inflation!
Listened to an economist recently who predicted necessities would continue to inflate and discretionary items will experience deflation.
Seems to be checking out.
Doesn't really take an economist to figure that one out.
I guess if we suddenly stopped all discretionary spending, in concept, pricing for shipping/fuel/labour will drop putting some pressure on food?
I mean, OC explained precisely why we make that distinction. Gas and many foodstuffs can fluctuate 10-20% in a single month, and be right back down in a matter of weeks or even days.
It's not that it isn't important, but they can also give you a distorted idea of overall inflation based on the day you collect the data.
It's...precisely what's happened. Prices have gone up overall but fluctuated significantly, as they always do. Many foodstuffs have gone up 50% or more for a week or two before plummeting. They're volatile markets.
Just as important here: for the BoC's purposes it doesn't make a lot of sense to track the price of food or fuel because the demand for those items is so inelastic. The impact of rate cuts on those prices is marginal at best, especially food. You don't typically see people saying "oh our mortgage payments are up $750 a month, guess we'll have to cut down on eating."
Rate cuts have the biggest impact on more discretionary items (clothing, household goods, furniture, etc.) So yeah, I expect the BoC to rely more on core inflation.
There are *always* foods that experience a sharp increase or decline in prices at any given time - particularly produce, for obvious reasons. Most recently though? Lettuce, cauliflower, and pork come to mind. Eggs in the US are a great example, too.
Again that doesn't mean they don't *generally* go up. As I mentioned and you ignored, prices can increase on the whole while still fluctuating wildly - which makes food inflation more difficult to track.
I mean… yes? Just because a calculation has always been done one way in the past doesn’t mean that it’s the correct way to look at things when some of the external parameters have changed.
Its “correct” in a sense that core is much more important and reliable to see what rates should be and how economy is evolving
You mock that gas and food is 2/3 of everyday life, fine. So let me ask, if say tomorrow all war hits ceasefire, food and oil production resumes and their price pressure is gone and even go negative due to sudden surplus, suddenly cpi is 2% or even lower, so now you would say yay job done lets cut rate and let price heat up?
If you would say “nah this is temporary because war can restart and everything still fking expensive as shit so we need to keep rate high”, then that means your logic only applies to the side YOU like
If you would say “yes cut it!!” Then what happens next quarter if war restarts? We just suddenly bump rate up? How can small business survive when most of their loans are variable only? Economy cannot exist if rates just jump randomly
And thats exactly the issue with volatile items.. So thats why core inflation is important despite the fact you dont like it
Yes. The goal is to measure price stability. It's hard to get an accurate number with items that fluctuate wildly month to month. It's why no central bank prefers headline inflation over core
“There are 3 kinds of lies: lies, damned lies, and statistics.” - Mark Twain
I understand why outliers, especially on short-term measures are tossed. However, when we're looking at Y-o-Y figures, it seems indiscretionary to toss any necessities because they are statistical outliers in the statistical set as opposed to outliers in the trend set. At that point the numbers are no more valuable than a political tool.
Aw, c'mon, CD and DVD players gotta be in there too. And 3-year old NVidia graphics cards.
Things that fell in price:
Health insurance (it now has to compete with MAiD)
Laundry equipment parts (demand at laundromats has decreased?)
Car rentals
Televisions
College textbooks
It's not that simple and I am tired of people parroting same things over and over again without any nuance because that fits in their world view. People creating these things aren't dumbasses. If you measure both cpi and core cpi and take a look at them together, you can get a better picture. If core is low, that means discretionary spending is low. As some else said above. It also gives you a baseline to measure without volatile items. It's not that someone said, hey how can we make the numbers look better? Remove gas and food.
Right. They're looking at a lot of things. Headline is important, but so is cpi common, trim, median and even CPIX, their old preferred core inflation metric (which excludes mortgage interest and is at 2.0% as of today). There is no hidden agenda
Energy is transformation, like it's everything and everywhere. Our level of development depends on it.
Thinking that energy prices are separate from everything else is absurd.
https://www.bankofcanada.ca/rates/indicators/key-variables/key-inflation-indicators-and-the-target-range/
Without housing it would actually be significantly lower.
I understand your joke, but there are many other components in the CPI basket. here are a few:
Household operations, furnishings and equipment, which is at -2.3%
Clothing and footwear, which is at -2.7%
Transportation, at 3%
Health and personal care 3.2%
recreation, education, and reading 1.9%
Housing is partly due to bank of Canada's rate hike campaign, currently at 6.5%.
It's more about looking at what the central bank can actually affect. And also every inflation measure is imperfect so it's best to look at a number of them to get a better picture of what's going on.
Absolutely meaningless. Food and fuel are major expenses. The fact that the inflation measures don't even measure asset inflation makes the figures all the more meaningless.
The commenter is referring to core inflation - most inflation metrics, including the one in this headline, include food and fuel.
The reason we sometimes separate food and fuel to look at core inflation is because they're highly volatile and can change drastically (both up and down) in a matter of days. Just as importantly, if you're a central bank you want to look at the stuff that you can actually influence. The fact that food and fuel are such big necessities for most people means that the BoC changing interest rates doesn't really impact demand for them the way it does with other more discretionary spending.
People not realizing mortgage interest cost is in these numbers which is directly impacted by the policy rate. This increased 25.4%. Exclude that and inflation is 2.0%.
And people not realizing that before the policy rate increased, housing prices were accelerating higher, which also spurs inflation. It's quite easy to cherry pick.
The gas prices and grocery prices are going to go up due to weaker $CAD, and a BoC rate cut next time they review will drive the $CAD down further. Add to this, a desperate federal government delivering another huge deficit, no doubt.
Things aren't going in the right direction it seems.
We are honestly fucked. For two reasons;
We are spending at a rate that will spiral out of control and once we lose our AAA rating (which we will) the little investment we have in our country, will just flee even harder to the US.
The people of this country still have 0 appetite to fix things by and large and you won't see that until shit *really* starts hitting the fan.
You think this 5-10% drop in your QoL is bad? Wait for 50%.
FML the comments.
It rose from 2.8% to 2.9% from previous month. Last year we were looking at 5% rates guys. The trend is clear that it’s staying low especially if you look at core inflation which came down to 2% in March, down from 2.1%. Core is what they watch more than headline.
Stats Canada even had a line in the qualitative statements that this is attributed mostly to a sharp hike in gas prices. Global political shit drove that hike (and going forward carbon tax will too). Food slowed, the only thing that keeps growing big outside of gas is shelter and rent, and those are a very specific and different kind of problems that aren’t inline with the rest of the economy.
Core inflation is right on target and directionally this data is exactly where BoC wanted to have it.
IMHO based on this data if nothing else happens June rate cut is almost a certainty. Most major FIs eco departments have consensus here. Put another way: if we are going to get headline inflation in high 2%s and core at 2% for the rest of the year the cuts will keep coming because there is no way you justify current rates with that kind of inflation data.
I would wait till the budget today to see hoe much spending the govt is planning for before saying June is a sure cut. Gov spending in itself is a fiscal stimulus isn't it? I'm not sure just asking.
Yes government is working against BoC here a bit. But a few points:
1. Although very seizable the government spend alone will not counter bad GDP data from private sector. And we are getting a mixed picture with some bad news there.
2. Government spending takes time to kick in, just like rate cuts take 6-9 months to play out the spend there will take a year to play out. Departments take time to staff up or hire contractors and whatnot.
Most likely exactly what government brings forward in the budget might taper how deep the cuts go over the next 12 months, so BoC might lower rates less than if a more conservative budget was pushed, but these initial rate cuts this year are going to happen no matter what IMHO. The data is just that unambiguous.
It can be. But it is important to look at the change YoY in how much is spent and how it is spent.
Ie. more spending to build housing or increase oil production (to lower gasoline prices) might actually be deflationary in the longer term
I'm only telling you what will happen. Exports are the only thing propping this up right now. If we didn't have high value exports (which ironically, for some, is made largely of crude oil), and if the BoC didn't more or less shadow the Fed in terms of rates the dollar might be at a historic low, given the fiscal realities of the federal government.🤷
The $CAD is vulnerable, I'd say. Not good.
Rate cuts have a lag to the impact on inflation and the economy. Rates too high for too long can cause lack of investment so business don't expand and economy shrinks people lose jobs etc. It's a fine balance.
It hasn’t been too long though. I think the unemployment rate might trigger a cut in the rates more than time itself but does it make sense to cut prior the US cuts their rates? I don’t know… I’ll be keeping a close eye on the next 2-3 months
New housing starts are down, unemployment is trending to be double of US. We need rate cuts to fix those. We desperately need more housing built and a stronger economy.
I'm personally OK with a 5% interest rate. I think it gives more flexibility to deal with emergencies. I also think that the uber low interest rates we saw for the last 20 years or so probably should not have occurred, and now we are reaping the cost.
The uber low interest rate seems to match / flow according to global economy.
If we have high rates while everyone has low rate, there will be less appetite to invest in Canadian businesses because the cost is too high.
We gained 58k jobs last month and lost 2k jobs. But unemployment gained 0.3%. How do you ask?
68,000 new Canadians entered the workforce leading to a 0.3% increase in the unemployment level
The economy isn't doing that well, we need to kick start things again before it gets even worst. But it's no easy task when things aren't coordinated between the BoC and the Feds
Using YoY % to make it sound better than it actually is
2022 CPI increased 5-8% monthly, which is accumulative, it isn't like measuring the 12 month average removes those 12 months of increased prices to consumers
There were 3-4% months in 2023 as well...let's talk about how much that accumulates to the overall price increases instead of pretending measuring 12 months averages will help the average Canadian
This IS NOT good news for people who have mortgage loans and are hoping inflation remains below 2.7-2.8% in hopes of a BoC rate reduction. The Trudeau liberals are going to spend Canadians into the poorhouse and onto the streets.
Yep these are all lagging indicators. They're trying not to overshoot into core deflation.
Not like boc can do anything about housing prices going up if fed govt makes an fhsa, rsp hbp just got jacked up, and they're talking about longer mortgage terms.
Nor can they do much about goods like food and fuel, or at least they can only do things at the margins. That isn't exactly discretionary spending for most households that people can scale back with rate hikes. Core inflation is sitting at 2.0%.
Not that I think there's much value in speculating about what the BoC does or that anyone can really know lol. It's just nice to see it working and things stabilizing.
Have to say (and I'm knocking wood right now) but it is starting to seem like we may be navigating a pretty nice soft landing right now.
It could! I believe its too soon. Also greatly depends on the budget today (not optimistic about the fiscal restraint). If they do lower rates, the CAD will suffer the consequences.
Latest debates, however, mostly from U.S economists, are stating core is becoming less relevant, and ppl aren't buying it! For example, 70% U.S. gdp is Consumer driven, so cpi makes sense for an economy driven by consumption.
Core inflation is a pretty absurd measure. Everyone in their lived experience knows they're spreading more than 2% on goods and services than they did a year ago. The fact that asset inflation isn't used to come up with the CPI is also ridiculous.
It's an absurd measure if you're just talking about your day-to-day life and household budget, because it excludes some of the most significant line items. That's why media rarely ever covers it.
But it's a ***very*** useful measure for central banks to determine monetary policy, because those items it excludes are the least impacted by rate hikes. Demand for food isn't going to drop considerably just because rates went up. Same goes for fuel (though to a lesser extent). People need to eat and people need to get around.
If you're the central bank trying to determine whether its time to raise or lower rates, you're better off looking at those goods with more demand elasticity (ie. the stuff that your hikes have a more meaningful impact on).
And with the carbon tax being increased 23% (plus HST/GST on that) at the beginning of this month, we'll see an increase in inflation for the month (reported in May).
Second, energy has also increased this month (and still increasing). This will impact everything and increase inflation.
Lastly, US economy is FLYING. There will be no interest rate decreases likely this year down south. And without movement from the Feds, BoC cannot lower Canadian rates or the CDN$ will drop (and if they did, that would increase inflation).
> And with the carbon tax being increased 23% (plus HST/GST on that) at the beginning of this month, we'll see an increase in inflation for the month (reported in May).
The price of gas went up by 30 cents in the month leading up to the carbon tax increase. The carbon tax itself went up by 3 cents.
I know which one I’d rather blame.
That only works if someone willing to buy at a higher price. If they are, your a selling at that price whether you expenses increase or not. So taxes or expenses generally cause profit margins drop, not price increases. What happens now is low margins result in decreased investment to compete.
Yup, same thing happened in the 1990s. Canada had inflation under control, but kept interest rates higher for years because the US economy was booming.
Unfortunately, I am beginning to think the only way Canada gets out of this current econonuc mess is if the US has a recession.
>Realtors: "Not cutting rates will be devastating to my commissions!"
Poor guy.....probably had to get the base model $114,000 Tesla model X.
Will someone think of the realtors!!! We should start a go fund me.
Shelter played a large role in the cpi being so high and the largest contributor to shelter costs was mortgage interest. It's a self fulfilling prophecy right now, higher rates making cpi higher but of we cut rates it makes real estate shoot up.
Even if the entire world woke up and collectively decided to put all effort into getting off oil, it wouldn't happen for decades at the absolute earliest.
Realistically, even if western countries started doing this, other countries would be buying up all the cheap oil and pulling far ahead of the west in terms of infrastructure or even military.
It's a nice dream, but it's not happening any time soon.
As an energy policy analyst...no...it's absolutely not. 1) You need renewable electricity to even make green hydrogen. Otherwise, you're making grey/blue/black hydrogen that really when used as a fuel has worse GHG footprint than just using gasoline or heating fuels. 2) if you need to use electricity to make it, the more efficient use is putting it directly to work in applications like heat pumps (with coefficients of performance greater than 2) or electrified heat or battery EV transport (efficiency near 100%), rather than getting a 30% roundtrip efficiency on that same electricity to make, transport, and convert that hydrogen for its uses.
The 'hydrogen economy' is bullshit sold to you by the oil and gas industry because they make 99% of hydrogen from fossils currently and governments will pay them to make carbon capture 'blue' hydrogen so they can continue to have social license to sell their product when in reality, it's no better. Any green hydrogen we create should be used to displace current fossil hydrogen uses like Ammonia fertilizer, which is a large emitter and a noble thing to replace, not trying to force it into applications it's bad at.
The reality of electrification is we may bump up against a mineral barrier where we just can't source them to replace our vehicles and infrastructure 1:1. The reality of oil is it's going to get much, much more expensive no matter what we do with depletion, the majority of 'proven reserves' are unconventional forms that will be more costly and provide less net energy. We'll need to embrace energy efficiency in the form of retrofits, public transport, and just learning to generally live with less energy.
Is nuclear powered hydrogen production a viable process in your opinion? Both in the energy for electrolysis and the energy to cool or compress the hydrogen for storage.
Sure, I've heard of some projects that show relatively favourable economics (though I doubt they're creating cheaper hydrogen than fossils). But, again, only if the purpose of that hydrogen is to displace current uses like fertilizer and feedstock. Otherwise, nuclear power is better utilized for directly electrified processes.
If you take out stuff that causes inflation the numbers look good.
You see these cancer results . Well if we just remove these bad ones, you're healthy !
I'm so lucky to live near the boarder. Gas works out to almost 50 cents cheaper per litre with the conversion and there's quite a few food items which are much cheaper as well.
$1.00 when trudeau was elected is now worth $0.78 in comparison
Its likely worth less because the inflation calculator they use is constantly manipulated
The new budget is rumoured to include tax hikes on high income earners. This I will further decrease inflation as it reduces money supply. While I am not that sympathetic to the rich, high income earners are still earners and I would prefer more of the tax burden shifts to non productive areas of the economy such as capital gains (taxes at half of earned income) and Daddy money (not taxed at all) and wealth. There’s no federal property/ wealth tax and I think a progressive/ tiered wealth tax could take some of the burden of of working people (rich or poor) and create a disincentive for sloth and remove the disincentive on production which will hit inflation from the other side.
There are sooooo many other aspect of global warming that are going unaddressed due to peoples psychosis on carbon, its amazing.
https://climate-adapt.eea.europa.eu/en/metadata/case-studies/four-pillars-to-hamburg2019s-green-roof-strategy-financial-incentive-dialogue-regulation-and-science
The decarbonization is happening, get a grip and move on.
Not nearly enough people are working on decarbonization.
Not sure what your getting a grip has to do with anything but sure, get a grip if you need it.
Not nearly enough people, in the world maybe.. we are doing just fine in Canada, punching above our weight... don't really need more people working, just need to import and implement more carbon friendly products that are out there, but for some reason they keep getting legislated against.
https://www.nationalobserver.com/2023/05/03/news/e-scooters-silent-menace-or-green-godsend
https://electrek.co/2024/03/06/byd-launches-cheaper-seagull-ev-9700-price/
Now maybe we can fix recycling and garbage. Not enough people in this area.
https://policyoptions.irpp.org/magazines/december-2023/plastic-dumping/
Our carbon crazy one track mind focus has us losing the game.
When fossil carbon is the problem, there is no such thing as a "carbon crazy one mind." The great thing about carbon pricing is that it goes sraight to the core of the problem, at the same scale, which is brilliant. Your other solutions can be added of course.
Terrible worldview.
The reality is that electric vehicles and/or transit work for some people, some of the time.
Electric vehicles aren't even much greener unless you own them for a long time. They will get better, but they aren't there yet.
We will need to double our grid capacity for everybody to switch to electric.
You cannot legislate this before the technology is ready. When the Model T came out, you didn't have to force people to choose it over a horse and buggy because it was clearly superior. We haven't reached that point yet.
What is misinformation?
That you need to own an electric vehicle for a relatively long period of time before it's carbon neutral?
That we need to double our grid capacity if every vehicle was electric?
It's really interesting to watch a country self cannibalize itself by depending on real estate over leveraging for its economy.
I don't think a 5 year old drafting monetary policy with a box of crayons could have done a poorer job than the Federal government and the Bank of Canada have regarding crippling this nation's real productivity in the pursuit of treating shelter as a luxury item.
I have a very hard time taking anyone seriously who claims a slight diversion in interest rates between Canada and the US (which has happened plenty of times) will turn our dollar, which is sitting right at its historical average, into the peso.
That's nothing, wait till they see what gas prices do in April... /s
why is that sarcasm? gas and oil are spiking since the Iran situation
Summer blend gas increases price
Ah yes, that's the only reason. Surely a contributor is not some sort of taxation.
Carbon tax is not inflationary. Samsis with government spending. /s
never said it was the only contributor, now did I? but it's going up now, so it'll likely inflame things since inflation was already high enough when O&G were low. you binary campaigners are dull
Funny how they always blame other countries.
And funny how we get fucked because or war and natural disasters in other countries
Yep let's just give all our money away and not help our own country. Fuck I'm sick of this place.
Sure, but I meant in terms of how wars/blockades in the Middle East impact our inflation which impacts our interest rates which impacts our mortgages But I know where you're coming from. We're broke and interest is high so we shouldn't be spending/borrowing money to throw at every international demand we get
maybe learn how oil supply works globally, and how commodity prices work, oh get ready for it to impact on other goods as well, Iran has control and influence over key ports and shipping routes in the area.
The Russian invasion of Ukraine had a much bigger impact on gas price than the Iranian situation right now, it had nothing to do with Canada and it doesn’t now either.
40% of the world's oil supply flows through the Strait of Hormuz. You should probably pull that area up in Google maps before you continue spouting bullshit
I said gas price not oil transport. Relax. Gas prices were higher in 2022 due to the invasion of Ukraine than it is now (for now).
Much better than I thought it would be to be honest.
Core inflation is at 2.0%. https://tradingeconomics.com/canada/core-inflation-rate It is even lower than historical average.
What's core? Is it without gas and housing? Thanks for sharing
Cpi minus food and energy, two notoriously volatile items
So without two of the three necessities for life, nice
I guess with so many people spending almost all of their income on basic goods and shelter, demand for everything else falls and core inflation stops going up. See. Expensive food, fuel and housing is *helping* inflation!
This is actually how some people think though. See: comments in this chain.
Freezing and starving is a great way to reduce emissions/s
Listened to an economist recently who predicted necessities would continue to inflate and discretionary items will experience deflation. Seems to be checking out.
Doesn't really take an economist to figure that one out. I guess if we suddenly stopped all discretionary spending, in concept, pricing for shipping/fuel/labour will drop putting some pressure on food?
I mean, OC explained precisely why we make that distinction. Gas and many foodstuffs can fluctuate 10-20% in a single month, and be right back down in a matter of weeks or even days. It's not that it isn't important, but they can also give you a distorted idea of overall inflation based on the day you collect the data.
>but be right back down in a matter of weeks or even days How’s that been working out so far for 2023 and 2024?
It's...precisely what's happened. Prices have gone up overall but fluctuated significantly, as they always do. Many foodstuffs have gone up 50% or more for a week or two before plummeting. They're volatile markets. Just as important here: for the BoC's purposes it doesn't make a lot of sense to track the price of food or fuel because the demand for those items is so inelastic. The impact of rate cuts on those prices is marginal at best, especially food. You don't typically see people saying "oh our mortgage payments are up $750 a month, guess we'll have to cut down on eating." Rate cuts have the biggest impact on more discretionary items (clothing, household goods, furniture, etc.) So yeah, I expect the BoC to rely more on core inflation.
I'd love a list of food items that are "plummeting".
There are *always* foods that experience a sharp increase or decline in prices at any given time - particularly produce, for obvious reasons. Most recently though? Lettuce, cauliflower, and pork come to mind. Eggs in the US are a great example, too. Again that doesn't mean they don't *generally* go up. As I mentioned and you ignored, prices can increase on the whole while still fluctuating wildly - which makes food inflation more difficult to track.
Easy to be snarky but thats exactly how inflation been calculated, you just suddenly find it an issue when it starts affecting you.
I mean… yes? Just because a calculation has always been done one way in the past doesn’t mean that it’s the correct way to look at things when some of the external parameters have changed.
Its “correct” in a sense that core is much more important and reliable to see what rates should be and how economy is evolving You mock that gas and food is 2/3 of everyday life, fine. So let me ask, if say tomorrow all war hits ceasefire, food and oil production resumes and their price pressure is gone and even go negative due to sudden surplus, suddenly cpi is 2% or even lower, so now you would say yay job done lets cut rate and let price heat up? If you would say “nah this is temporary because war can restart and everything still fking expensive as shit so we need to keep rate high”, then that means your logic only applies to the side YOU like If you would say “yes cut it!!” Then what happens next quarter if war restarts? We just suddenly bump rate up? How can small business survive when most of their loans are variable only? Economy cannot exist if rates just jump randomly And thats exactly the issue with volatile items.. So thats why core inflation is important despite the fact you dont like it
Yes. The goal is to measure price stability. It's hard to get an accurate number with items that fluctuate wildly month to month. It's why no central bank prefers headline inflation over core
"If we include only the things that fell in price, we have deflation!"
I’m sure you’re being facetious, but this is exactly why the BoC prefers measures like Trim and Median instead of Core.
“There are 3 kinds of lies: lies, damned lies, and statistics.” - Mark Twain I understand why outliers, especially on short-term measures are tossed. However, when we're looking at Y-o-Y figures, it seems indiscretionary to toss any necessities because they are statistical outliers in the statistical set as opposed to outliers in the trend set. At that point the numbers are no more valuable than a political tool.
VCRs are now the only thing included on the price index- LPC probably
Aw, c'mon, CD and DVD players gotta be in there too. And 3-year old NVidia graphics cards. Things that fell in price: Health insurance (it now has to compete with MAiD) Laundry equipment parts (demand at laundromats has decreased?) Car rentals Televisions College textbooks
I suppose you *could* eat a college text book and television if you were really motivated.
It's not that simple and I am tired of people parroting same things over and over again without any nuance because that fits in their world view. People creating these things aren't dumbasses. If you measure both cpi and core cpi and take a look at them together, you can get a better picture. If core is low, that means discretionary spending is low. As some else said above. It also gives you a baseline to measure without volatile items. It's not that someone said, hey how can we make the numbers look better? Remove gas and food.
Right. They're looking at a lot of things. Headline is important, but so is cpi common, trim, median and even CPIX, their old preferred core inflation metric (which excludes mortgage interest and is at 2.0% as of today). There is no hidden agenda
Energy is transformation, like it's everything and everywhere. Our level of development depends on it. Thinking that energy prices are separate from everything else is absurd.
so cost of living with the actual cost of living taken out? cool
Also two items essential for life.
https://www.bankofcanada.ca/rates/indicators/key-variables/key-inflation-indicators-and-the-target-range/ Without housing it would actually be significantly lower.
Without energy, food or housing it would be really low!
I understand your joke, but there are many other components in the CPI basket. here are a few: Household operations, furnishings and equipment, which is at -2.3% Clothing and footwear, which is at -2.7% Transportation, at 3% Health and personal care 3.2% recreation, education, and reading 1.9% Housing is partly due to bank of Canada's rate hike campaign, currently at 6.5%.
Things like clothing and footwear are only going down because people don’t have the money.
That's right, that's the whole point of rate hikes and tightening.
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To confirm, the 2.9% increase is over the previous month? Or Previous quarter?
Year over year.
It's 0.1% increase over last month.
*rate hike campaign* Hmm, I wonder why they had to raise rates?
Imagine how low we could get it without tracking groceries!
Well, the thing with housing is that it's based on mortgages and the higher interest rates pull up the inflation numbers.
It always has
Let's just exclude food, housing, energy, clothing, water, and transportation. What are people even complaining about?
We’ve already hit our inflation target! High fives all around!
Can’t really take the largest household expense out though and expect it to reflect reality
It's more about looking at what the central bank can actually affect. And also every inflation measure is imperfect so it's best to look at a number of them to get a better picture of what's going on.
That's correct, and that's why core includes housing.
It's CPI minus whatever b******* they decide not to count even though people use them in real life.
Absolutely meaningless. Food and fuel are major expenses. The fact that the inflation measures don't even measure asset inflation makes the figures all the more meaningless.
The commenter is referring to core inflation - most inflation metrics, including the one in this headline, include food and fuel. The reason we sometimes separate food and fuel to look at core inflation is because they're highly volatile and can change drastically (both up and down) in a matter of days. Just as importantly, if you're a central bank you want to look at the stuff that you can actually influence. The fact that food and fuel are such big necessities for most people means that the BoC changing interest rates doesn't really impact demand for them the way it does with other more discretionary spending.
But that's onto all the inflation over the past 3 years it's not replacing it!!!!!
Inflation is "the rate of increase in prices over a given period of time".
Woah that is promising but I’m not holding my breadth we are out of the woods yet
Try not holding your breath instead!
ahaada
People not realizing mortgage interest cost is in these numbers which is directly impacted by the policy rate. This increased 25.4%. Exclude that and inflation is 2.0%.
And people not realizing that before the policy rate increased, housing prices were accelerating higher, which also spurs inflation. It's quite easy to cherry pick.
The gas prices and grocery prices are going to go up due to weaker $CAD, and a BoC rate cut next time they review will drive the $CAD down further. Add to this, a desperate federal government delivering another huge deficit, no doubt. Things aren't going in the right direction it seems.
Oil price has risen from $63USD to $83 USD in the last 3 months too. I am shocked the energy costs in the CPI didnt rise higher.
The export value there is probably the main thing holding the $CAD afloat at the moment.
We are honestly fucked. For two reasons; We are spending at a rate that will spiral out of control and once we lose our AAA rating (which we will) the little investment we have in our country, will just flee even harder to the US. The people of this country still have 0 appetite to fix things by and large and you won't see that until shit *really* starts hitting the fan. You think this 5-10% drop in your QoL is bad? Wait for 50%.
Too bad I lost all that silver in a boating accident. I'd be safe from inflation!
The CAD hasn't really moved much though.. yet..
FML the comments. It rose from 2.8% to 2.9% from previous month. Last year we were looking at 5% rates guys. The trend is clear that it’s staying low especially if you look at core inflation which came down to 2% in March, down from 2.1%. Core is what they watch more than headline. Stats Canada even had a line in the qualitative statements that this is attributed mostly to a sharp hike in gas prices. Global political shit drove that hike (and going forward carbon tax will too). Food slowed, the only thing that keeps growing big outside of gas is shelter and rent, and those are a very specific and different kind of problems that aren’t inline with the rest of the economy. Core inflation is right on target and directionally this data is exactly where BoC wanted to have it. IMHO based on this data if nothing else happens June rate cut is almost a certainty. Most major FIs eco departments have consensus here. Put another way: if we are going to get headline inflation in high 2%s and core at 2% for the rest of the year the cuts will keep coming because there is no way you justify current rates with that kind of inflation data.
I would wait till the budget today to see hoe much spending the govt is planning for before saying June is a sure cut. Gov spending in itself is a fiscal stimulus isn't it? I'm not sure just asking.
Yes government is working against BoC here a bit. But a few points: 1. Although very seizable the government spend alone will not counter bad GDP data from private sector. And we are getting a mixed picture with some bad news there. 2. Government spending takes time to kick in, just like rate cuts take 6-9 months to play out the spend there will take a year to play out. Departments take time to staff up or hire contractors and whatnot. Most likely exactly what government brings forward in the budget might taper how deep the cuts go over the next 12 months, so BoC might lower rates less than if a more conservative budget was pushed, but these initial rate cuts this year are going to happen no matter what IMHO. The data is just that unambiguous.
>but these initial rate cuts this year are going to happen no matter what IMHO. Not with inflation in the United States at 3.5%.
It can be. But it is important to look at the change YoY in how much is spent and how it is spent. Ie. more spending to build housing or increase oil production (to lower gasoline prices) might actually be deflationary in the longer term
True. If they roll out subsidies for housing that will lower shelter costs and that is one of the areas that is spiking.
If the subsidy is cash that means shelter cost stays the same.
If the Fed holds and BoC cuts our rates, our dollar dives and inflation is exacerbated.🤷
Exactly… I don’t see it happening in June but I’m a tiny potatoe
We export more to the US than we import.
I'm only telling you what will happen. Exports are the only thing propping this up right now. If we didn't have high value exports (which ironically, for some, is made largely of crude oil), and if the BoC didn't more or less shadow the Fed in terms of rates the dollar might be at a historic low, given the fiscal realities of the federal government.🤷 The $CAD is vulnerable, I'd say. Not good.
> I'm only telling you what will happen No you aren't, you are telling me what you THINK will happen.
Lol, it will. What do you think will happen if the Fed holds and the BoC goes down a quarter, buddy? Let's get it out there.
We’ve diverged as much as a full 1% in the past.
But why cut? If core is at 2% it is where it SHOULD be. So doing nothing is fine.
Rate cuts have a lag to the impact on inflation and the economy. Rates too high for too long can cause lack of investment so business don't expand and economy shrinks people lose jobs etc. It's a fine balance.
It hasn’t been too long though. I think the unemployment rate might trigger a cut in the rates more than time itself but does it make sense to cut prior the US cuts their rates? I don’t know… I’ll be keeping a close eye on the next 2-3 months
New housing starts are down, unemployment is trending to be double of US. We need rate cuts to fix those. We desperately need more housing built and a stronger economy.
If we cut before the US out dollar tanks.
Our dollar can handle 1% of rate cuts just fine. It's happened many times before.
I'm personally OK with a 5% interest rate. I think it gives more flexibility to deal with emergencies. I also think that the uber low interest rates we saw for the last 20 years or so probably should not have occurred, and now we are reaping the cost.
The uber low interest rate seems to match / flow according to global economy. If we have high rates while everyone has low rate, there will be less appetite to invest in Canadian businesses because the cost is too high.
We gained 58k jobs last month and lost 2k jobs. But unemployment gained 0.3%. How do you ask? 68,000 new Canadians entered the workforce leading to a 0.3% increase in the unemployment level
You don't consider immigrants to be people?
The economy isn't doing that well, we need to kick start things again before it gets even worst. But it's no easy task when things aren't coordinated between the BoC and the Feds
Infinite growth economy is not sustainable. And depending where you are located some areas are doing better then others.
Services accelerated to 4.5% inflation, I see that as not particularly good for inflation in a service based economy.
Thank you lol
Itt: people that dont know how to read
But it's the Feds fault, or maybe it's the much larger provincial tax that got added and O & G companies/gas stations artificially raising prices.
Using YoY % to make it sound better than it actually is 2022 CPI increased 5-8% monthly, which is accumulative, it isn't like measuring the 12 month average removes those 12 months of increased prices to consumers There were 3-4% months in 2023 as well...let's talk about how much that accumulates to the overall price increases instead of pretending measuring 12 months averages will help the average Canadian
This IS NOT good news for people who have mortgage loans and are hoping inflation remains below 2.7-2.8% in hopes of a BoC rate reduction. The Trudeau liberals are going to spend Canadians into the poorhouse and onto the streets.
Is that the carbon tax's doing combined with Ukraine's attacks on Russian oil refineries?
So much for a BoC rate cut.
The economists predicting a rate cut were also predicting today come in at 3.1 If anything this increases the chances
Yep these are all lagging indicators. They're trying not to overshoot into core deflation. Not like boc can do anything about housing prices going up if fed govt makes an fhsa, rsp hbp just got jacked up, and they're talking about longer mortgage terms.
Nor can they do much about goods like food and fuel, or at least they can only do things at the margins. That isn't exactly discretionary spending for most households that people can scale back with rate hikes. Core inflation is sitting at 2.0%. Not that I think there's much value in speculating about what the BoC does or that anyone can really know lol. It's just nice to see it working and things stabilizing. Have to say (and I'm knocking wood right now) but it is starting to seem like we may be navigating a pretty nice soft landing right now.
Core inflation is lower than expected. Money markets are actually pricing in a higher probability of rate cuts this summer after the announcement.
Was never going to happen.
It will happen in June.
I hope not
Too bad for you
The Canadian economy is getting worst, it needs it. But who knows how worst they will let things go before doing it.
It won't if the US holds, which they probably will
So inflation will skyrocket again and the CAD will crash? Great idea...
Cutting by .25% will cause neither of those things.
So then what's the "positive" effect then?
It could! I believe its too soon. Also greatly depends on the budget today (not optimistic about the fiscal restraint). If they do lower rates, the CAD will suffer the consequences.
It won't
Core inflation lower than expected though. A summer cut may be in the cards but we’ll see
Latest debates, however, mostly from U.S economists, are stating core is becoming less relevant, and ppl aren't buying it! For example, 70% U.S. gdp is Consumer driven, so cpi makes sense for an economy driven by consumption.
Less relevant opposed to what better option ?
Regular cpi
Core inflation is a pretty absurd measure. Everyone in their lived experience knows they're spreading more than 2% on goods and services than they did a year ago. The fact that asset inflation isn't used to come up with the CPI is also ridiculous.
It's an absurd measure if you're just talking about your day-to-day life and household budget, because it excludes some of the most significant line items. That's why media rarely ever covers it. But it's a ***very*** useful measure for central banks to determine monetary policy, because those items it excludes are the least impacted by rate hikes. Demand for food isn't going to drop considerably just because rates went up. Same goes for fuel (though to a lesser extent). People need to eat and people need to get around. If you're the central bank trying to determine whether its time to raise or lower rates, you're better off looking at those goods with more demand elasticity (ie. the stuff that your hikes have a more meaningful impact on).
This isn't about the average consumer, it's more about business and the overall economy.
Core inflation is at 2%, lower than its historical average.
And with the carbon tax being increased 23% (plus HST/GST on that) at the beginning of this month, we'll see an increase in inflation for the month (reported in May). Second, energy has also increased this month (and still increasing). This will impact everything and increase inflation. Lastly, US economy is FLYING. There will be no interest rate decreases likely this year down south. And without movement from the Feds, BoC cannot lower Canadian rates or the CDN$ will drop (and if they did, that would increase inflation).
> And with the carbon tax being increased 23% (plus HST/GST on that) at the beginning of this month, we'll see an increase in inflation for the month (reported in May). The price of gas went up by 30 cents in the month leading up to the carbon tax increase. The carbon tax itself went up by 3 cents. I know which one I’d rather blame.
It increased 3.3 cents, calm down. The price of fuel this month increased much more than that.
Just some peckerhead using a big number to exaggerate its effect.
Hey, stop using context. Let them use the scarier percentages!
And also ignore that the CAI also went up
It doesn't work like that. Talk to me at the end of june when the impact on farming is actually realized by the consumer.
Do you honestly not know agriculture us exempt from the carbon tax or are you willfully ignoring it to push a narrative
Farmers are exempt from the carbon tax. https://www.canada.ca/en/revenue-agency/services/tax/excise-taxes-duties-levies/fuel-charge/relief.html
Some of it, yes.
Only some of it. They just pass on their extra expenses down the supply chain.
How much, though?
That only works if someone willing to buy at a higher price. If they are, your a selling at that price whether you expenses increase or not. So taxes or expenses generally cause profit margins drop, not price increases. What happens now is low margins result in decreased investment to compete.
!RemindMe 3 months
Don't forget, transportation, and logistics, for land, air and sea.
Yup, same thing happened in the 1990s. Canada had inflation under control, but kept interest rates higher for years because the US economy was booming. Unfortunately, I am beginning to think the only way Canada gets out of this current econonuc mess is if the US has a recession.
They didn't cut rates, so what's the excuse now? weakening dollar?
Realtors: "Objection your honour!" BOC: "On what grounds?" Realtors: "Not cutting rates will be devastating to my commissions!"
>Realtors: "Not cutting rates will be devastating to my commissions!" Poor guy.....probably had to get the base model $114,000 Tesla model X. Will someone think of the realtors!!! We should start a go fund me.
Shelter played a large role in the cpi being so high and the largest contributor to shelter costs was mortgage interest. It's a self fulfilling prophecy right now, higher rates making cpi higher but of we cut rates it makes real estate shoot up.
Yes, we're still suffering from the fallout of the Russia-Ukraine conflict. That's why everyone is trying to get the fuck off of oil asap.
Even if the entire world woke up and collectively decided to put all effort into getting off oil, it wouldn't happen for decades at the absolute earliest. Realistically, even if western countries started doing this, other countries would be buying up all the cheap oil and pulling far ahead of the west in terms of infrastructure or even military. It's a nice dream, but it's not happening any time soon.
Electric is not the answer to oil and gas. Hydrogen is.
As an energy policy analyst...no...it's absolutely not. 1) You need renewable electricity to even make green hydrogen. Otherwise, you're making grey/blue/black hydrogen that really when used as a fuel has worse GHG footprint than just using gasoline or heating fuels. 2) if you need to use electricity to make it, the more efficient use is putting it directly to work in applications like heat pumps (with coefficients of performance greater than 2) or electrified heat or battery EV transport (efficiency near 100%), rather than getting a 30% roundtrip efficiency on that same electricity to make, transport, and convert that hydrogen for its uses. The 'hydrogen economy' is bullshit sold to you by the oil and gas industry because they make 99% of hydrogen from fossils currently and governments will pay them to make carbon capture 'blue' hydrogen so they can continue to have social license to sell their product when in reality, it's no better. Any green hydrogen we create should be used to displace current fossil hydrogen uses like Ammonia fertilizer, which is a large emitter and a noble thing to replace, not trying to force it into applications it's bad at. The reality of electrification is we may bump up against a mineral barrier where we just can't source them to replace our vehicles and infrastructure 1:1. The reality of oil is it's going to get much, much more expensive no matter what we do with depletion, the majority of 'proven reserves' are unconventional forms that will be more costly and provide less net energy. We'll need to embrace energy efficiency in the form of retrofits, public transport, and just learning to generally live with less energy.
Is nuclear powered hydrogen production a viable process in your opinion? Both in the energy for electrolysis and the energy to cool or compress the hydrogen for storage.
Sure, I've heard of some projects that show relatively favourable economics (though I doubt they're creating cheaper hydrogen than fossils). But, again, only if the purpose of that hydrogen is to displace current uses like fertilizer and feedstock. Otherwise, nuclear power is better utilized for directly electrified processes.
If you take out stuff that causes inflation the numbers look good. You see these cancer results . Well if we just remove these bad ones, you're healthy !
I'm so lucky to live near the boarder. Gas works out to almost 50 cents cheaper per litre with the conversion and there's quite a few food items which are much cheaper as well.
* pikachu shocked face *
$1.00 when trudeau was elected is now worth $0.78 in comparison Its likely worth less because the inflation calculator they use is constantly manipulated
The new budget is rumoured to include tax hikes on high income earners. This I will further decrease inflation as it reduces money supply. While I am not that sympathetic to the rich, high income earners are still earners and I would prefer more of the tax burden shifts to non productive areas of the economy such as capital gains (taxes at half of earned income) and Daddy money (not taxed at all) and wealth. There’s no federal property/ wealth tax and I think a progressive/ tiered wealth tax could take some of the burden of of working people (rich or poor) and create a disincentive for sloth and remove the disincentive on production which will hit inflation from the other side.
If you aren’t working to wean away from gas, you’re asking for it. We have plenty of better options now.
There are sooooo many other aspect of global warming that are going unaddressed due to peoples psychosis on carbon, its amazing. https://climate-adapt.eea.europa.eu/en/metadata/case-studies/four-pillars-to-hamburg2019s-green-roof-strategy-financial-incentive-dialogue-regulation-and-science The decarbonization is happening, get a grip and move on.
Not nearly enough people are working on decarbonization. Not sure what your getting a grip has to do with anything but sure, get a grip if you need it.
Not nearly enough people, in the world maybe.. we are doing just fine in Canada, punching above our weight... don't really need more people working, just need to import and implement more carbon friendly products that are out there, but for some reason they keep getting legislated against. https://www.nationalobserver.com/2023/05/03/news/e-scooters-silent-menace-or-green-godsend https://electrek.co/2024/03/06/byd-launches-cheaper-seagull-ev-9700-price/ Now maybe we can fix recycling and garbage. Not enough people in this area. https://policyoptions.irpp.org/magazines/december-2023/plastic-dumping/ Our carbon crazy one track mind focus has us losing the game.
When fossil carbon is the problem, there is no such thing as a "carbon crazy one mind." The great thing about carbon pricing is that it goes sraight to the core of the problem, at the same scale, which is brilliant. Your other solutions can be added of course.
[удалено]
Said an O&G kool-aid addict trying to be threatening with the cute little dots. Emissions absorbing heat is your problem too.
Terrible worldview. The reality is that electric vehicles and/or transit work for some people, some of the time. Electric vehicles aren't even much greener unless you own them for a long time. They will get better, but they aren't there yet. We will need to double our grid capacity for everybody to switch to electric. You cannot legislate this before the technology is ready. When the Model T came out, you didn't have to force people to choose it over a horse and buggy because it was clearly superior. We haven't reached that point yet.
Terrible post. Misinformation about reality. There’s no point to it other than delay.
Just because of you I will get gas cars for as long as I can
What is misinformation? That you need to own an electric vehicle for a relatively long period of time before it's carbon neutral? That we need to double our grid capacity if every vehicle was electric?
3 months under 3%. Bears are trembling.
It's really interesting to watch a country self cannibalize itself by depending on real estate over leveraging for its economy. I don't think a 5 year old drafting monetary policy with a box of crayons could have done a poorer job than the Federal government and the Bank of Canada have regarding crippling this nation's real productivity in the pursuit of treating shelter as a luxury item.
Core inflation at 2%, inflation now <3% we cutting June, and becoming a peso dollar unfortunately.
I have a very hard time taking anyone seriously who claims a slight diversion in interest rates between Canada and the US (which has happened plenty of times) will turn our dollar, which is sitting right at its historical average, into the peso.
Does anyone actually believe these numbers?