Economics Newsletter – February 20, 2022

Two contests to enter, another original article, and more!

Written By: Peter Robertson, Judy Lee, and Sumeet Dhat

Economy at a Glance

Economist of the Week

Economics Society News, Events, and Articles 


Join our Winter 2022 Writing Contest! Write a brief analysis about an economic topic of your choice and you could win a prize. Submissions are due on March 1st. Sign up here!

You can also sign up for the Canada-wide case competition being held by UofT. The topic is “Brain Drain” and you could win up to $1500. Participants must register by February 24th. Sign up here!

UWES Articles

The Russia-Ukraine Crisis Or: How I Learned About Economic Deterrence – by Sumeet Dhat

News and Noteworthy

Canada’s inflation rate rises to 5.1% — highest since 1991

New inflation data released this Wednesday showed Canada’s inflation rate continued to rise for the 7th straight month. Year-over-year inflation continues to be at its highest levels since 1991. Particularly of note to consumers has been the rise in price of groceries, which are up 6.5% year-over-year. The US has also shown a similar rise, reporting year-over-year increases of 7.5% for January, it’s highest rate in 40 years. Read more.

Bank of Canada deputy signals officials on track for March hike

A speech from a Bank of Canada deputy this week strengthened beliefs that Canadians can expect an interest rate hike when the bank makes it’s next decision on March 12th. While taking questions he said it was “Quite likely we’ll be saying something about that in a couple weeks time” in regards to interest rate hikes. This comes in the wake of CPI data released by StatsCan this week showing inflation rates continuing to rise, now at their highest levels in 30 years. Read more.

Canada real estate: Housing market breaks two price records

New data from the Canadian Real Estate Association showed record month-over-month and year-over-year increases in real estate prices for January. Prices rose 2.9% for the month of January. The association also stated that they don’t expect to see any significant increases in supply until the weather gets warmer, suggesting the issue may only continue to get worse over the coming months. Read more.

Air Canada CEO demands eased travel rules as bookings grow after Omicron takes a toll

The advisory against travel abroad took effect in mid-December in response to the Omicron strain, which reversed airlines’ upward trajectory across the globe. As the federal health minister announced the lift of most requirements for pre-departure COVID-19 testing as of February 28, the overall Canadian airline and travel sector will truly turn the corner this year. Air Canada’s CEO, Michael Rousseau, said robust advance ticket sales give the company confidence that passengers will return and that Omicron has deferred, not canceled, travel. Read more

Retail sales dropped 1.8 per cent in December to $57B, Statistics Canada says

Canadian retail sales fell 1.8 per cent to $57 billion in December as the spread of the Omicron variant and severe flooding in British Columbia and the Atlantic provinces disrupted transportation, retail operations and sales. With easing restrictions and improving supply chain bottlenecks, Statistics Canada’s preliminary estimate pointed to an increase in retail sales of 2.4 per cent in January. Yet beyond the initial rebound, alongside rapidly rising consumer prices and higher interest rates, the outlook on retail sales is mixed. Read more

C$ Weathers Ukraine Risk as Rate Hike Bets Remain Intact

The Canadian dollar edged lower against its U.S. counterpart on Thursday as the price of oil, one of Canada’s major exports, fell and rising tensions over Ukraine bolstered demand for safe-haven assets. More specifically, the loonie was 0.4% lower at 1.2747 to the greenback, and the currency dipped 0.1%. At the same time, investors are sticking to bets that the Bank of Canada would hike interest rates on March 2 for the first time since October 2018 and six times in total this year. Read more

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