Jump to content
The Official Site of the Vancouver Canucks
Canucks Community

Inflation : 40 Year High


Industrious1

Recommended Posts

1 hour ago, Bure_Pavel said:

Im in same boat, will be on the decline by then but probably still above 3%. Will probably look at shorter term for the next one like a 3 year fixed, until rates drop down to a more reasonable level. 

Historically speaking rates are at a reasonable level. Are the rates from 2009-22 the new reasonable or is the 4-5% historically what is normal? Stay tuned we're going to find out.

 

Could contain: Chart, Line Chart

 

 

  • Thanks 1
  • Cheers 1
  • Vintage 1
Link to comment
Share on other sites

Summary of the BOC statement.........

 

Bank of Canada overnight rate 4.75% vs 4.50% prior

  • Highlights of the Bank of Canada interest rate decision
  • Prior was 4.50%
  • The market was pricing a 60/40 chance of a hold ahead of the decision
  • The Bank of Canada last hiked rates in January

Statement highlights:

  • underlying inflation remains stubbornly high
  • Canada’s economy was stronger than expected in the first quarter of 2023
  • Consumption growth was surprisingly strong and broad-based
  • Spending on interest-sensitive goods increased and, more recently, housing market activity has picked up
  • The labour market remains tight
  • The Bank continues to expect CPI inflation to ease to around 3% in the summer
  • concerns have increased that CPI inflation could get stuck materially above the 2% target.
  • The statement no longer says the BOC "remains prepared to raise the policy rate further if needed to return inflation to the 2% target"

Key passage from the statement:

 
 
The Bank continues to expect CPI inflation to ease to around 3% in the summer, as lower energy prices feed through and last year’s large price gains fall out of the yearly data. However, with three-month measures of core inflation running in the 3½-4% range for several months and excess demand persisting, concerns have increased that CPI inflation could get stuck materially above the 2% target.

This looks like a one-and-done hike with the final paragraph no longer saying the BOC "remains prepared to raise the policy rate further if needed to return inflation to the 2% target". Instead it says:

Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

That's still a hawkish bias but it's certainly not as explicit and is a warning against pricing in further rate hikes beyond 4.75%, though the market is 50/50 on a July hike currently. Of course, that will depend on how inflation numbers and economic growth develop. The next BOC meeting is on July 12 and will include fresh forecasts via the Monetary Policy Report.

Tomorrow we will hear from BOC deputy Paul Beaudry and he will shape expectations further and explain this decision.

  • Thanks 1
Link to comment
Share on other sites

Someone posted this at Red Flag Deals.

 

 

https://www.vertex42.com/Calculators/Canadian-mortgage.html

 

Download a free feature-packed Canadian mortgage calculator spreadsheet! This Microsoft® Excel® template lets you choose a compound period (e.g. semi-annual for Canadian mortgages) and a variety of different payment frequencies (annually, semi-annually, quarterly, bi-monthly, monthly, semi-monthly, bi-weekly, and weekly). It also lets you see how making periodic extra payments (prepayments) can save you money and help pay off your mortgage sooner. You can also calculate the outstanding balance at the end of a given term.

 

 

Canadian-mortgage-calculator_large2.gif

Edited by The Arrogant Worms
  • Thanks 1
Link to comment
Share on other sites

It appears some of the strategy is to keep rates at atleast current levels so the bulk of the consumer sector is priced at 4-6 percent on mortgage debt.  
 

we are still seeing strong activity in many parts of the economy and consumers seem to be resilient more so than most would have expected.  
 

For those with the mortgages with maturity 2,3, or 4 years away if it were my money I would setup my finances to absorb minimum what rates are now no guarantee they will drop anytime soon.

Link to comment
Share on other sites

Oh look at this.

 

Corporate pricing being looked at as a driver if inflation

 

https://www.bnnbloomberg.ca/bank-of-canada-now-eyeing-corporate-pricing-behaviour-in-its-inflation-fight-1.1930655

 

More than a year into its interest rate hiking cycle, the Bank of Canada has set its sights on “corporate pricing behaviour” in its battle with inflation – a shift economists say is noteworthy, though it’s not yet clear how the bank is viewing the role of corporate profits in today’s elevated consumer prices.

 

The reference was slipped into the central bank’s Wednesday statement on its decision to raise interest rates a quarter of a percentage point to 4.75 per cent, listing it as one of four key areas of interest in its bid to bring inflation down to two per cent.

Link to comment
Share on other sites

On 6/7/2023 at 8:12 AM, Warhippy said:

My wife and I have just under 3 years left before we have to renew.  I see it getting a shade worse before better but it will be nice to know that rates will have to drop before then

I locked in like six months ago for four years. I expect it to get worse. I am selling off stock to get to zero debt sooner instead of doing my move of leverage to buy stock (but the opposite is designed to just get myself to the leverage thing sooner). 

 

I don't expect rates to drop. I expect them to go up in another month. And it's not like anyone has stopped printing money. In fact it's still accelerating. 

 

The odds of a early nineties double digit interest rate is low, but it's not zero. Pay down your debt. I sure as hell am.

 

The religion of not being in debt is starting to get to the people but has not taken hold.

 

The religion of not being in debt is strong in the business world but there's still more jobs than workers.

 

The religion of not being in debt is like heresy to world wide governments. Even the US debt ceiling just held spending. I guess eventually taxation COULD swell to that level, but it takes a lot of inflation to do that.

 

In Canada Poillevre is trying to talk himself blue in the face to try to get the feds to balance the budget. But the people in power point out that he isn't tabling his own balanced budget to consider, and can talk villain about denying kids dental benefits (that they have had all along in practice, main issue with welfare kids isn't the dentist, it's their lazy stupid parents not bringing them to the dentist, at least in my experience), and nobody is brave enough to raise taxes, so it's baked in inflation that is needed to make the numbers even kind of work.

 

So more inflation and higher rates are very much still in the cards.

Link to comment
Share on other sites

11 hours ago, bishopshodan said:

I dont know how the blinking blank this works but unemployment numbers are up, 5.2%.

 

Does that mean that inflation might start coming down?

:huh:

There are still tons of jobs unfilled. Perhaps there's just a greater percentage of people with unrealistic expectations.

 

There's still a labour shortage overall.

Link to comment
Share on other sites

On 6/7/2023 at 11:55 AM, nuckin_futz said:

Summary of the BOC statement.........

 

Bank of Canada overnight rate 4.75% vs 4.50% prior

  • Highlights of the Bank of Canada interest rate decision
  • Prior was 4.50%
  • The market was pricing a 60/40 chance of a hold ahead of the decision
  • The Bank of Canada last hiked rates in January

Statement highlights:

  • underlying inflation remains stubbornly high
  • Canada’s economy was stronger than expected in the first quarter of 2023
  • Consumption growth was surprisingly strong and broad-based
  • Spending on interest-sensitive goods increased and, more recently, housing market activity has picked up
  • The labour market remains tight
  • The Bank continues to expect CPI inflation to ease to around 3% in the summer
  • concerns have increased that CPI inflation could get stuck materially above the 2% target.
  • The statement no longer says the BOC "remains prepared to raise the policy rate further if needed to return inflation to the 2% target"

Key passage from the statement:

 
 
The Bank continues to expect CPI inflation to ease to around 3% in the summer, as lower energy prices feed through and last year’s large price gains fall out of the yearly data. However, with three-month measures of core inflation running in the 3½-4% range for several months and excess demand persisting, concerns have increased that CPI inflation could get stuck materially above the 2% target.

This looks like a one-and-done hike with the final paragraph no longer saying the BOC "remains prepared to raise the policy rate further if needed to return inflation to the 2% target". Instead it says:

Governing Council will continue to assess the dynamics of core inflation and the outlook for CPI inflation. In particular, we will be evaluating whether the evolution of excess demand, inflation expectations, wage growth and corporate pricing behaviour are consistent with achieving the inflation target. The Bank remains resolute in its commitment to restoring price stability for Canadians.

That's still a hawkish bias but it's certainly not as explicit and is a warning against pricing in further rate hikes beyond 4.75%, though the market is 50/50 on a July hike currently. Of course, that will depend on how inflation numbers and economic growth develop. The next BOC meeting is on July 12 and will include fresh forecasts via the Monetary Policy Report.

Tomorrow we will hear from BOC deputy Paul Beaudry and he will shape expectations further and explain this decision.

How long do you suppose that OPEC is going to let the low energy prices persist?

 

Will people stop spending when they are being comped tons of money from the government?

 

Sure, there are those with big mortgages that will get (and probably already have) the spending restraint religion. But they are a minority of the economy. Lots of renters. Tons of paid off. And lots that could still pay their small mortgage that has aged a while even at high rates. 

 

So spending isn't going anywhere yet, so why stop raising prices? Especially with input costs still working their way through the system?

 

And there's still underemployment. It was only yesterday that I was talking to a dude that runs an hotel that he can't hire housing staff other than the duel 71 year olds he has doing it, and he has a restaurant attached he can't even open because he can't hire any staff. And this in an area (cape breton) that is famous for not having any jobs!

 

Coast to coast there's jobs a wanting and nobody to fill. Obviously people don't want money.

 

Eventually the pogey has to end, the budget has to balance, and the market needs to equalise. 

 

Until then, more inflation, and higher interest rates.

Link to comment
Share on other sites

On 6/9/2023 at 7:34 PM, ronthecivil said:

How long do you suppose that OPEC is going to let the low energy prices persist?

Will people stop spending when they are being comped tons of money from the government?

Coast to coast there's jobs a wanting and nobody to fill. Obviously people don't want money.

Eventually the pogey has to end, the budget has to balance, and the market needs to equalise.

Until then, more inflation, and higher interest rates.

IMO oil prices are where they are because there is no effective way to sanction Russian oil and gas. As long as a secondary market exists where China, India, Turkey etc load up on the sly the market is well supplied.

 

As for people being comped money and being unwilling to work. A lot of people who are unemployed are working in non traditional ways. Why would someone want to work as housing staff at your buddy's hotel when they can shake their cakes on OnlyFans for 30 minutes a day and make bank?

 

US May CPI 4.0% y/y versus 4.1% expected

  • US May 2023 consumer price index data
US CPI yy
 
US CPI YoY

 

  • Prior
  • CPI MoM +0.1% vs +0.2% expected
  • Prior MoM reading was +0.4%
  • CPI YoY 4.0% vs 4.1% expected.
  • Core CPI MoM +0.4% versus +0.4% expected
  • Core YoY 5.3% versus 5.3% expected
  • Shelter +0.6% versus +0.4% last month
  • Real weekly earnings -0.1% vs +0.1% prior (revised to 0.0%)
  • Food +0.2% vs 0.0% prior
  • Energy -3.6% m/m vs +0.6% prior
  • New vehicles -0.1% vs -0.2% prior
  • Used cars and trucks +4.4% vs +4.4% prior
  • Core services ex-shelter +0.1% m/m
  • Core services ex-shelter 3-month annualized +2.9%

This assures the Fed won't hike tomorrow. Odds down to 5%.

 

The core numbers are stubbornly high but the cherry on top is the fall in earnings and the revision lower in last month's earnings data. The big driver in core inflation was used car prices; stripping that out, core CPI was flat.

 
 

The shelter index increased 8.0% over the last year, accounting for over 60% of the total increase in all items less food and energy.

US CPI mm
 
 

Note the June 2022 number there. That will be lapped in next month's report, knocking 1.2 pp off the year-over-year reading. Given the struggles of oil prices, there's a good chance we see CPI below 3% in June, which might turn a skip into something more.

 

Summary:

The Consumer Price Index for All Urban Consumers (CPI-U) saw a slight 0.1% rise in May, as per the U.S. Bureau of Labor Statistics. Over the past 12 months, this index increased by 4.0% before seasonal adjustments. The largest contributor to the monthly increase was the shelter index, followed by the used cars and trucks index. The food index rose by 0.2% in May, with the index for food at home and away from home rising by 0.1% and 0.5% respectively. Meanwhile, the energy index dropped by 3.6% in May, with all its major components seeing a decline. The index for all items excluding food and energy increased by 0.4% in May, with the shelter index being a significant contributor. Several indexes, such as household furnishings and operations and airline fares, decreased over the month. In terms of annual performance, the all items index saw the smallest 12-month increase since March 2021, whereas the index for all items less food and energy rose by 5.3%.

 

Edited by nuckin_futz
  • Thanks 2
Link to comment
Share on other sites

On 6/9/2023 at 7:34 PM, ronthecivil said:

How long do you suppose that OPEC is going to let the low energy prices persist?

 

Will people stop spending when they are being comped tons of money from the government?

 

Sure, there are those with big mortgages that will get (and probably already have) the spending restraint religion. But they are a minority of the economy. Lots of renters. Tons of paid off. And lots that could still pay their small mortgage that has aged a while even at high rates. 

 

So spending isn't going anywhere yet, so why stop raising prices? Especially with input costs still working their way through the system?

 

And there's still underemployment. It was only yesterday that I was talking to a dude that runs an hotel that he can't hire housing staff other than the duel 71 year olds he has doing it, and he has a restaurant attached he can't even open because he can't hire any staff. And this in an area (cape breton) that is famous for not having any jobs!

 

Coast to coast there's jobs a wanting and nobody to fill. Obviously people don't want money.

 

Eventually the pogey has to end, the budget has to balance, and the market needs to equalise. 

 

Until then, more inflation, and higher interest rates.

Most of the people under 30 want to get rich quick through investing, flipping, or some other work at scale that has potential to make them rich quick. 

 

Wolf of Wall Street was a goal for quite a few people that I know personally through friends and work. 

Of course in 2021 everything was going up in stocks and crypto, so lots of people fancied themselves to be investors by following YouTube channel recommendations. 

 

Working regular jobs in the service industry isn't appealing to the youth from North America. I used to be against the idea that companies would be allowed to bring in migrant workers and pay them less, but have changed my mind on this long ago. 

 

 

Link to comment
Share on other sites

3 hours ago, Gurn said:

here it goes, again

Shell just added  a dime to the price of every liter of gas. Now $2.099,  in Powell River.

 

Well sure, the six major, western oil companies (BP, Shell, Chevron, Equinor, ExxonMobil and TotalEnergies) need to keep raising prices so they can beat last year's record PROFITS of $219 BILLION.

  • Vintage 1
Link to comment
Share on other sites

4 hours ago, Gurn said:

here it goes, again

Shell just added  a dime to the price of every liter of gas. Now $2.099,  in Powell River.

 

 

51 minutes ago, The Arrogant Worms said:

1.94 here

 

45 minutes ago, 204CanucksFan said:

Well sure, the six major, western oil companies (BP, Shell, Chevron, Equinor, ExxonMobil and TotalEnergies) need to keep raising prices so they can beat last year's record PROFITS of $219 BILLION.

CFDS is trading at around a $72.25 average over the past 3 months and is down from the $111 high on the year over year via the WTI index.  CFDS is around $77 on the Brent index and down from about $120 year over year.  Canadian crude is around $59.

 

there have been solid price reductions in most Canadian oils on the major indexes over the last year.  there have been zero shut downs and zero disruptions in the supply.  OPEC made a statement about reducing oil.  The washington refineries and terminals have seen zero slow down or shut down in production coming from the US mid west

 

This is literally price gouging and that's it.  Like there is literally zero excuse for it as fuel stayed static in the Okanagan with zero reductions in price for almost 6 weeks and then overnight 5 days ago it jumped a dime.

 

But...you know, they blame the government.  or taxes and the government.  Or BC and the government.  But never EVER is it the endless record proit making oil and gas companies

  • Vintage 2
Link to comment
Share on other sites

I live in Calgary (at least for the next two months) and things are insane here too. Housing has been so hot the past couple of months.

 

I became debt-free (not including my mortgage) in September. Talk about great timing!

 

Anyway, I'm selling my house and most of my possessions and moving to Abu Dhabi for at least two years. I figure I'll ride things out there until Canada calms the hell down and then maybe I'll move back.

  • Like 1
Link to comment
Share on other sites

19 hours ago, babych said:

I live in Calgary (at least for the next two months) and things are insane here too. Housing has been so hot the past couple of months.

 

I became debt-free (not including my mortgage) in September. Talk about great timing!

 

Anyway, I'm selling my house and most of my possessions and moving to Abu Dhabi for at least two years. I figure I'll ride things out there until Canada calms the hell down and then maybe I'll move back.

Atleast gas is still at 1.39 here and no PST sure helps

 

Link to comment
Share on other sites

Wandered through the local Freshco today.

McCain hash browns 800 gram bag- now $3.29.

 

I'm thinking about buying a bigger freezer, and stocking up Big time, when the sales hit, on this, and other things.

Link to comment
Share on other sites

13 hours ago, Gurn said:

Wandered through the local Freshco today.

McCain hash browns 800 gram bag- now $3.29.

 

I'm thinking about buying a bigger freezer, and stocking up Big time, when the sales hit, on this, and other things.

I cut all these convenience products out of my life.

 

I want hashbrowns? I'm cubing potatoes. It doesnt take too long and you can think of the cost savings as your "salary" for the activity.

Link to comment
Share on other sites

3 minutes ago, Caboose said:

I cut all these convenience products out of my life.

 

I want hashbrowns? I'm cubing potatoes. It doesnt take too long and you can think of the cost savings as your "salary" for the activity.

Yup. And spuds are easy to grow. Even just on a balcony. 

Link to comment
Share on other sites

Please sign in to comment

You will be able to leave a comment after signing in



Sign In Now
  • Recently Browsing   0 members

    • No registered users viewing this page.
×
×
  • Create New...