Economics Newsletter – Mar 22, 2024

New UWES articles, CPI data, and more!

Written By: Benjamin Pipicelli, Lexx Thomson, Dorje Gyaltsen, & Gordon Huynh

Economics Newsletter – Mar 22, 2024

Canada’s Economy at a Glance


Author’s Commentary

Canadian CPI 

On a monthly basis, the headline index rose by 0.1% SA, reflecting some mixed readings on volatile underlying components. Gasoline prices rebounded, along with airfares, while grocery store price inflation, at 2.4% y/y, is running at the slowest pace seen since mid-2021, as prices fell by 0.5% m/m SA. Shelter prices were up by 0.6% m/m SA as natural gas and fuel oil prices rebounded, although rent and mortgage interest costs decelerated in monthly terms, and are running at 8.2% and 26% y/y, respectively. The Bank of Canada will look through the volatile categories mentioned above, with other core measures providing a better signal of inflation stemming from underlying demand. On that score, virtually every core measure looked more encouraging. Services ex. shelter inflation slowed to 1.6% y/y, showing that the sluggishness in consumer demand is working to tame inflation in that area, which also suggests a further slowdown in wage inflation ahead, something that the Bank is looking for in order to trim interest rates.  

News and Noteworthy

A Trump win in 2024 puts the USMCA trade deal on thin ice

Former U.S. President Donald Trump winning the White House in 2024 could create trade chaos for Canada in short order, according to Capital Economics. The London-based research firm says the United States-Mexico-Canada Agreement (USMCA) trade pact, struck during Trump’s presidency in 2019, could become an early casualty of a second administration led by the current Republican frontrunner. “We are not convinced by the idea that Trump would stick with the USMCA simply because he negotiated it,” Capital Economics deputy North America economist Stephen Brown stated in a report. Read more.

Canada real estate: Affordability falls as income needed to buy a home increases

While mortgage rates have softened slightly, rising home prices have eroded improvements in housing affordability, a new analysis has found. According to an analysis conducted by, the minimum income required to purchase an average-priced home increased in 11 of the 13 markets examined between January and February. Between December and January, affordability had improved amid softening mortgage rates. Read more.

Hydrogen a ‘multibillion-dollar opportunity’ for Canada

Federal Energy and Natural Resources Minister Jonathan Wilkinson says selling hydrogen to Germany is a multibillion-dollar opportunity for Atlantic Canada. On Monday, the minister spelled out a plan that he expects to spur “massive investments” in producing the fossil fuel alternative. Wilkinson is in Germany, where he announced Canadian financing for H2Global, a government-backed financial mechanism aimed at creating stable market prices and fostering investment. Speaking to reporters on Monday, he says it is “premature” to disclose a number. Read more.

Experts slam carbon capture as clock ticks on Alberta’s $16.5B mega project

Energy analysts are lobbing criticism at carbon capture and storage (CCS) technology as Canada’s oil and gas industry and the federal government point fingers over the massive $16.5 billion project taking shape in Alberta’s oilsands. In the latest example, the Institute for Energy Economics and Financial Analysis (IEEFA) warned members of Australia’s Melbourne Petroleum Club that CCS “presents ongoing risks which may negate its benefits.” Read more.

Canada’s productivity is low. What does that actually mean?

When Statistics Canada released the latest gross domestic product (GDP) data at the end of February, the country’s avoidance of a recession during difficult economic times failed to cheer many economists, pundits and business leaders. Yes, Canada’s real GDP grew by 0.2 percent in the fourth quarter of 2023, even as the Bank of Canada seeks to keep the economy cool with higher interest rates. But, worried voices warn, a related statistic reveals a serious problem with the country’s productivity — with implications for everything from population to policy to our standard of living. Read more.

Economics Society News, Events, and Articles

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