ECONOMIC IMPACT & RESOURCES

Inflation rises again, to new 39-year high of 8.1%

Canada’s inflation rate rose to 8.1 per cent last month, Statistics Canada says, the fastest annual increase in the cost of living in decades.

Gasoline was the biggest single contributor to the overall rate going up, as pump prices were up by 54.6 per cent compared to the same month a year ago. If gasoline is stripped out, the inflation rate would be 6.5 per cent.

Another major source of inflation this year has been food prices, which rose by 8.8 per cent in the past year. That’s the same pace of increase seen the previous month.

On top of higher prices for food and gasoline, the data agency documented a surge in demand and prices for travel-related services. “The return of sporting events, festivals and other large in-person gatherings has resulted in higher demand for accommodation, particularly in major urban centres,” Statistics Canada said.

Prices for accommodation rose by about 50 per cent across the country compared with a year ago, and the cost of air transportation rose by 6.4 per cent in the month and is up by 25 per cent compared to a year ago.

More rate hikes expected

Although the 8.1 per cent figure is the fastest annual increase since 1983, economists had been expecting the rate to come in even higher, with a consensus of those polled by Bloomberg forecasting a rate of 8.4 per cent.

Despite yet another multi-decade high in inflation, Wednesday’s data will likely come as a small relief to the Bank of Canada, which has been undertaking an aggressive campaign of raising interest rates to rein in the runaway cost of living.

After raising its benchmark rate by the biggest amount in 20 years last week, the bank is forecast to keep raising lending rates, although perhaps not as aggressively as before. 

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Bank of Canada governor expects inflation will remain ‘painfully high’ all year

In an interview with CTV News, Bank of Canada Governor Tiff Macklem said the inflation rate is “unfortunately… probably going to start with a seven for the rest of the year.”

Last month’s inflation rate increase was mainly attributed to higher gasoline prices. In the interview, Macklem said gas prices have since come down and so he expects in a month from now, when the national statistics agency publishes its July inflation data, the rate “probably will come down a bit.”

However, Macklem said demand is running ahead of the economy’s ability to produce the goods people want, which will continue to create inflationary pressures.

In response to higher than expected inflation, on July 13 the Bank of Canada hiked its overnight interest rate by 100 basis points to 2.5 per cent. It was the biggest rate hike by the central bank since August 1998.

The next rate decision from the Bank of Canada is set for Sept. 7, following the scheduled Aug. 16 StatCan release of its July inflation report.

In the interview, Macklem said that while getting inflation back to the two per cent target is paramount, he’s anticipating increasing the policy rate again “pretty quickly.”

“We are deliberately front-loading our interest rate response. We want to get ahead of this,” he said.

In the interview, Macklem also spoke about what’s driving the current economic situation, and whether he thinks a recession is on the horizon.

POLICY UPDATES

Ontario extends sick leave program until March 2023

Ontario will be extending its temporary paid sick leave program by about eight months as the province continues to battle the spread of COVID-19.

The program, which offers up to three paid sick days per employee, will remain in place until March 31, 2023. It was originally set to expire at the end of July.

In a news release issued Thursday, the government said eligible workers will continue to receive up to $200 a day if they need to get tested, vaccinated, self-isolate, or care for a family member who is ill from COVID-19.

The Ford government first amended the Employment Standards Act in April 2021 to allow for three paid sick days in an attempt to curb COVID-19 transmission in essential workplaces. The program was meant to be in place for about six months, but it has been extended multiple times.

The program remains temporary and specific to the novel coronavirus. In December, Labour Minister Monte McNaughton said he was committed to offering three paid sick days throughout the pandemic. There is no further updates as to whether or not the program will remain in place after the pandemic is declared an endemic or be included in the upcoming budget.

OTHER NEWS

P.E.I. premier makes major changes in cabinet shuffle

P.E.I. Premier Dennis King announced changes to his cabinet Friday morning. The cabinet has two new members: Cornwall-Meadowbank MLA Mark McLane becomes minister of finance and Montague-Kilmuir MLA Cory Deagle is minister of transportation and infrastructure.

James Aylward, who was minister of transportation and infrastructure, and Brad Trivers, social development and housing, are out of the cabinet.

Three ministers changed portfolios:

• Darlene Compton moves from finance to agriculture and land, as well as justice and public safety. She remains deputy premier.
• Matthew MacKay moves from economic growth, tourism and culture to social development and housing.
• Bloyce Thompson moves from agriculture and land; justice and public safety to economic growth, tourism and culture.

Four positions were unchanged:

• Jamie Fox, fisheries and communities.
• Natalie Jameson, education and lifelong learning, minister responsible for the status of women.
• Steven Myers, environment, energy and climate action.
• Ernie Hudson, health and wellness.

Premier King also retains his roles as president of executive council, minister responsible for intergovernmental affairs, Indigenous relations, and Acadian and francophone affairs.

Ontario webinar on the new Right to Disconnect legislation

The Ontario Ministry of Labour, Immigration, Training and Skills Development is hosting two free webinars to provide information to employees and employers on the written policy on disconnecting from work requirements. The webinars will be delivered by a subject-matter expert from the ministry who will:

• provide an overview of the rules
• identify key deadlines
• answer your questions about the requirements (time permitting)

Dates

• July 28, 2022 from 1:30 p.m. to 2:30 p.m.
• August 24, 2022 from 1:30 p.m. to 2:30 p.m.

Register now, don’t miss the chance to learn more about the written policy on disconnecting from work. Please note these sessions are provided by the Government of Ontario and are for informational purposes only.

Rogers hires new CTO following a nationwide network outage

Rogers Communications Inc. has appointed Ron McKenzie as the telecom giant’s new chief technology officer, less than two weeks after the company’s network went offline and left millions of Canadians unable to access internet, cell phone, or television services.

A Rogers spokesperson confirmed that McKenzie, formerly the president of the company’s business unit that sold telecom services to corporate clients, would take on the role effective immediately, replacing former CTO Jorge Fernandes.

“Rogers can confirm Jorge Fernandes will be stepping step down from his role as Chief Technology and Information Officer. Effective immediately, Ron McKenzie becomes Chief Technology and Information Officer,”

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