the rennie outlook 2021



Consumer price inflation matters insofar as it both indicates the extent to which the value of money erodes over time (with lower inflation equating to a greater preservation of the value of money) and guides the Bank of Canada’s decision-making on interest rates: the higher the inflation, the higher interest rates go, and vice versa. With the demand for goods and services waning significantly in the aftermath of our response to Covid-19 (that is, the implementation of an economic lock down), Canadian inflation also slowed—in fact, it turned negative (deflation) in both April and May.

Inflation has since rebounded somewhat, but remains below the Bank of Canada’s target of 2%.

OUR 2021 OUTLOOK As the Canadian economy expands back towards its pre-Covid level, elevated demand and, for some products, constrained supply chains will put upward pressure on prices. That said, inflation is expected to remain below 2% in 2021.



Despite the ongoing headwinds facing BC’s labour market, median weekly wages (for full-time workers) continued to rise through 2020: by the end of last year, wages were up by 4.7% compared to one year earlier. As this was more than double the rate of consumer price inflation, the purchasing power of those who were able to continue working through the pandemic rose.

OUR 2021 OUTLOOK Wages are expected to rise only modestly in 2021; that is, at or slightly above the anticipated rate of inflation (of near 2%). While somewhat counter-intuitive given the continuing recovery in employment and the tightening of the labour market, many of the job additions will be in sectors that were initially hit the hardest by the pandemic (and that pay less, on average).


Copyright © 2021 rennie group of companies. All rights reserved. This material may not be reproduced or distributed, in whole or in part, without the prior written permission of the rennie group of companies. Current as of January 18, 2021. All data from Real Estate Board of Greater Vancouver and Fraser Valley & Rennie. While the information and data contained herein has been obtained from sources deemed reliable, accuracy cannot be guaranteed. rennie group of companies does not assume responsibility or liability for any inaccuracies. The recipient of the information should take steps as the recipient may deem necessary to verify the information prior to placing any reliance upon the information. The information contained within this report should not be used as an opinion of value, such opinions should and can be obtained from a rennie and associates advisor. All information is subject to change and any property may be withdrawn from the market at any time without notice or obligation to the recipient from rennie group of companies. E.&O.E. 8

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