ECONOMIC IMPACT & RESOURCES

Canadian inflation rose 6.9% in September: StatsCan

Canada’s inflation rate came in stronger than expected in September despite lower gasoline prices, with stickier underlying pressures likely to keep the Bank of Canada on an aggressive rate-hiking path.

The consumer price index was up 6.9 per cent from a year ago, higher than economist predictions for a 6.7 per cent gain, Statistics Canada reported Wednesday in Ottawa. During the month of September, prices rose 0.1 per cent versus expectations for a 0.1 per cent decline.

The data caused traders to shift bets toward a larger rate hike next week, with markets now pricing in a 60 per cent chance of a 75-basis-point increase from the Bank of Canada. That would take the benchmark overnight lending rate to 4 per cent, where it hasn’t been since early 2008.

Bond tumbled, with benchmark Canada two-year debt yielding 4.125 per cent as of 9:06 a.m. in Toronto, nearly 7 basis points higher than before the release. Five-year and 10-year yields also rose. The loonie strengthened, paring losses from earlier in the morning to trade at $1.377 per US dollar.

Annual inflation nonetheless slowed for a third month, down from 7 per cent in August, 7.6 per cent in July and a four-decade high of 8.1 per cent in June.

So-called core inflation — which excludes more volatile prices to generate a better gauge of underlying pressures — remained elevated. The average of the Bank of Canada’s three core measures was 5.3 per cent, matching a revised number for August.

Before Wednesday’s report, traders were fully pricing in a 50-basis-point interest rate increase at the next policy decision on Oct. 26, with a possibility of a three-quarter-point hike. Governor Tiff Macklem and his officials have already increased borrowing costs by three percentage points since March, bringing the overnight rate to 3.25 per cent.

“The Bank of Canada has clearly not slayed the inflation dragon yet, and is therefore set for another large increase in interest rates of at least 50 bps next week,” Karyne Charbonneau, an economist at Canadian Imperial Bank of Commerce, said in a report to investors.

While Canadians got some reprieve at the gas pump, the data show they continued to feel the pinch when filling their fridge. Rising prices for food — including meat, bakery products and vegetables — highlight how weakness in the Canadian dollar complicates the outlook for inflation.

Prices for food purchased from stores grew 11.4 per cent, the fastest year-over-year pace since August 1981. Those prices have been increasing at a faster rate than overall inflation for 10 consecutive months.

Mortgage interest costs continued to put pressure on inflation in September as Canadians renewed or initiated loans at higher rates, the statistics agency said.

While lower gas prices slowed goods inflation, cost inflation in services accelerated to 5.6 per cent from 5.5 per cent.

Average hourly wages rose 5.2 per cent on a year-over-year basis last month, meaning that prices are still rising faster than paychecks, the agency said. The gap in September was larger than in August.

B.C. small business tax rate access expanded

The BC government is expanding access to the small business tax rate in British Columbia.

Previously, access to the small business tax rate was gradually reduced when the taxable capital of businesses was more than $10 million. Access to the small business tax rate ended when businesses had $15 million or more of taxable capital. With the change, access to the small business tax rate will be gradually reduced when businesses have between $10 million and $50 million in taxable capital.

Growing B.C. businesses will be able to scale up by remaining eligible for the B.C. small business tax rate for longer, as the tax rate will not phase out until the $50-million taxable capital threshold ceiling. The change will benefit a wide range of businesses but will largely support those that are capital intensive.

This includes businesses that have taxable capital between $10 million and $15 million, where business owners may decide not to invest in their business to acquire new equipment in order to keep access to the small business tax rate. This may look like a company, such as a craft brewery, considering adding a production line to its operations, or a company needing to buy specialized equipment, such as a computer numerical control (CNC) machine.

The new, higher taxable capital ceiling will apply to taxation years that begin on or after April 7, 2022, which aligns with the federal approach, once passed.

Click here for more information.

POLICY UPDATES

Canada lifts work limit for international students to help with labour shortages

International students studying in Canada are now eligible to work more hours off campus as the country continues to grapple with labour shortages, according to the country’s immigration minister.

Starting Nov. 15, a previous limit of 20 hours per week that eligible students enrolled in full-time studies were allowed to work off campus will no longer apply, Sean Fraser said during a news briefing in Ottawa Friday.

The temporary measures will remain in place until the end of 2023, he said. “Through this change, the cap has been lifted. There’s not an upper limit,” Fraser told reporters at a coffee shop near the University of Ottawa campus.

This will help sustain Canada’s COVID-19 pandemic growth and provide a boost to employers in sectors that are particularly facing severe labour shortages, Fraser said.

Click here to see the media release.

PEI seeking feedback on the Employment Standards Act

Island residents are invited to have their say on the Employment Standards Act.

The Employment Standards Act Comprehensive Review Panel began reviewing the act in October 2021 and is now seeking feedback from the public. The panel has prepared an interim report to help guide public consultations.

To see the report and provide feedback, visit: Employment Standards Act Comprehensive Review.

“The panel has completed the first stage of its review and appreciates the thoughtful feedback and submissions it received from organizational stakeholders,” said Andrew Thompson, chairperson of the Employment Standards Act Comprehensive Review Panel. “The interim report is available and contains a detailed outline of stakeholder proposals for change, some related research, and comparisons with other Canadian jurisdictions. We encourage interested groups and individuals to take a look at the report and provide further input during this public stage of the review, so we can update and modernize the legislation together.”

The last time the act was updated was in 2006. One of the action items in the Poverty Reduction Action Plan for Prince Edward Island also recommends a review of the act.

The Employment Standards Act Comprehensive Review Panel is conducting the review in the following three stages:

• Conduct background research and meetings with stakeholders, including academics, industry groups, unions, umbrella groups representing the interests of employees and employers, the Employment Standards Board, the Employment Standards Branch, and related government entities to identify issues related to the current employment standards;
• Provide an interim report that identifies issues, to be used to help guide a larger public consultation process; and
• Write a final report that makes recommendations to the minister on changes to employment standards in the province.

OTHER NEWS

David Eby to become premier after B.C. NDP disqualifies Anjali Appadurai from leadership race

The B.C. NDP executive has voted to disqualify Anjali Appadurai from its leadership race, effectively crowning David Eby as the new premier of British Columbia.

Appadurai’s disqualification leaves Eby, the former attorney general and housing minister, as the only eligible candidate to succeed Premier John Horgan, who is due to step down on Dec. 3.

The party says chief electoral officer Elizabeth Cull is now considering moving up the date for the leadership vote.

After an hours-long, closed-door meeting Wednesday night, the party sent out a short statement announcing Appadurai’s disqualification, which followed an investigation into a wave of new membership sign-ups during the campaign.

“The B.C. NDP executive has voted to support the chief electoral officer’s recommendation to disqualify Anjali Appadurai as a candidate as a sanction for violating the rules,” president Aaron Sumexheltza said in the release, adding that it’s been “a challenging period for members of the party.”

Appadurai said she would not comment on the decision until Thursday afternoon, when she has scheduled a press conference outside the legislature.

Wednesday night’s announcement prompted a swift negative response from B.C.’s opposition parties.

The disqualification comes after the party’s chief electoral officer Elizabeth Cull recommended Appadurai not be allowed to run in a report that was leaked on Tuesday. Cull’s investigation found Appadurai, 32, broke campaign rules by improperly co-ordinating with third parties to encourage more people to sign up for party membership by Sept. 4 to vote in the leadership race.

“Because no other remedy can adequately address the failings and breaches of the Appadurai campaign in this leadership election contest, the CEO has reached the difficult conclusion that Ms. Appadurai should be disqualified as a candidate,” read the report.

“The improper co-ordination … played such a significant role in the Appadurai campaign that it is impossible to create a level playing field at this point, and thus impossible to restore the leadership election campaign to a state of integrity in which I could have confidence.”

Support CFA’s Advocacy Efforts for 2022-23

The CFA needs your support – be active, be engaged, and we need your donation to fight for franchising and franchised businesses across Canada. By supporting CFA’s advocacy with a financial donation, you can help augment and strengthen our advocacy initiatives. you can donate directly through the CFA’s Advocacy Donation Page.

DONATE NOW!

Promote your job opportunities with the CFA

To take advantage of this new opportunity, please submit your job postings (in which include a job description and directions for how to apply) to Andrew Schopp at aschopp@cfa.ca. For any inquiries, please contact Jessi-Lyna Wan at jwan@cfa.ca.

Please note the Introductory Offer ends October 31, 2022. Any job posting submitted on November 1, 2022, and onwards will be subject to charges.