Archives for May 16, 2019

Price of food still increased rapidly, but not as quickly as before

Canada’s inflation rate rose to two per cent in April, from 1.9 per cent the previous month.

The uptick, reported by Statistics Canada on Wednesday, was in line with what economists polled by Bloomberg had been expecting.

While gasoline and other energy prices have risen sharply since the fall, on an annual basis they are actually cheaper than they were this time last year — so much so that if the impact of gas prices were to be stripped out, the inflation rate would have been 2.3 per cent.

While gasoline is cheaper than it was 12 months ago, compared to March there was a huge jump, largely because of a new carbon tax being implemented in New Brunswick, Ontario, Manitoba, P.E.I. and Saskatchewan, while British Columbia hiked its existing levy.

All told, gasoline prices were 10 per cent higher in April than they were in March — but still cheaper on average than they were a year ago.

Scotiabank economist Derek Holt noticed an interesting one-time factor that nudged the rate higher: travel.

The price of travel and tours was 8.4 per cent higher in April than it was a year ago partly because Easter came during the month.

“The increase was partly attributable to the fact that the first two days of the Easter long weekend, a popular time for travel, took place in April this year,” Statistics Canada said.

Also, hundreds of Boeing 737 Max jets being grounded increased the price of airline tickets to much higher than usual, because of the sudden lack of seats.

“Boeing’s challenges and the Easter bunny therefore provided a bit of a false lift to inflation last month that won’t be sustained going forward,” Holt noted.

Food prices going up, but slower

Food prices have also risen sharply in the past year, but at a slower rate than in previous months. 

Statistics Canada said food prices have risen by 2.9 per cent between April 2018 and last month. While higher than the overall inflation rate, that’s down from a 3.6 per cent pace of gain between March 2018 and 2019.

The price of fresh vegetables has risen by 14.5 per cent over the past year, while fresh fruit has increased by 7.8 per cent, the data agency calculates. 

In terms of food prices, between April 2018 and April 2019:

• Apples went up by more than 20 per cent.
• Potatoes went up by almost 14 per cent.
• Lettuce went up by more than nine per cent.
• Bananas were more than two per cent cheaper.
• Beef was almost one per cent cheaper.
• Pork was almost one per cent cheaper.
• Chicken got more than one per cent cheaper.

Toronto-Dominion Bank economist James Marple said that all in all, the numbers were a mixed bag.

“Higher energy prices, but slowing food price inflation left overall prices up two per cent in April,” he said, adding that he doesn’t think the inflation rate will change enough to convince the Bank of Canada to change its interest rate policy in either direction for a while.

“Overall … inflation remains well contained and is likely to remain there over the foreseeable future.”

Canada Pension Plan Investment Board recovered from a weak quarter in late 2018 to produce a solid 8.9 per cent net return for its most recent financial year.

The Toronto-based investment manager for the Canada Pension Plan said its CPP Fund had $392.0 billion of net assets as of March 31, up $35.9 billion from the end of the 2018 financial year after all costs.

The fiscal fourth quarter also showed a recovery from a weak return of 1.1 per cent in the third quarter that was affected by a general downturn in stock markets in December.

CPPIB’s five-year real rate of return, which adjusts for inflation, was 8.9 per cent as of March 31 while the 10-year real rate of return was 9.2 per cent.

Those returns are well ahead of what the Chief Actuary of Canada has determined to be necessary to sustain the Canada Pension Plan to at least 2090.

Officials say the wildfire danger is already high to extreme in areas of Western Canada.

Natural Resources Canada’s Northern Forestry Centre in Edmonton is providing a briefing today on this year’s fire season forecast.

The forecast shows the fire danger is extreme in Yukon and parts of the southern prairies.

In British Columbia, an aggressive wildfire is burning west of Osoyoos near the U.S. border, and crews spent the weekend battling fires near some northern communities.

Alberta has 26 active fires, one of which is classified as out of control north of Peace River.

Federal officials say more than half of all wildfires are caused by humans, and lightning strikes account for the rest.

The department works with provinces and territories on wildfire management, provides maps of daily fire weather and behaviour, notes fire locations and does monthly seasonal fire severity forecasts through an online information website.

Monthly forecasts help to determine trends expected for the upcoming fire season.

Canada is offering homegrown softwood lumber and steel to help with the reconstruction of Paris’s famed Notre Dame Cathedral, which was partially destroyed by fire in mid-April.

In a letter sent to French President Emmanuel Macron this week, Prime Minister Justin Trudeau said Canada was proud to support France in the reconstruction of the iconic monument.

The Canadian Steel Producers Association and the Forest Products Association of Canada have already indicated their support for the Canadian government initiative.

Trudeau is in Paris today and Thursday to take part in a series of meetings in the fight against extremism and online violence, some two months after an attack at a mosque in Christchurch, New Zealand, left 51 dead.

Not long after arriving in Paris today, Trudeau made a visit to Notre Dame alongside the cathedral’s rector, Patrick Chauvet, and French Culture Minister Franck Riester.

The prime minister will also take part in the Christchurch Call to Action summit co-hosted by Macron and New Zealand Prime Minister Jacinda Ardern.

He’s also scheduled to speak at the VivaTech summit, an annual event celebrating innovation that brings together startups and leaders.

Trudeau also has several bilateral meetings scheduled with the leaders of Jordan and Norway today, and France and New Zealand on Thursday.