RENNIE OUTLOOK 2023
INFLATION
The level and persistence of inflation in 2022 in Canada put a nail in the view espoused by “Team Transitory” (which included one of your authors) that high, pandemic-related inflation would in relatively short order become but a historical footnote. Indeed, the annual rate of change in Canada’s Consumer Price Index peaked at 8.1% in June 2022, its highest level in four decades and the result of rising home prices, rents, shipping costs, energy prices and, yes, even interest rates. Fortunately, while we’ve now experienced 21 consecutive months of inflation exceeding the upper limit of the Bank of Canada’s target range of 1-3%, we’ve seen it abate for the past six months, with more relief on the horizon.
OUR 2023 OUTLOOK In what will be deemed a counter-intuitive view by some and a logical one by others (and both by a few), we predict that Canada’s headline inflation rate will fall substantially in the first half of 2023—from its current 6.3% to 3.1% by April— before slipping into the Bank’s target range from May through the end of the year.
CONSUMER PRICE INFLATION
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WAGES
The stabilization of labour markets over the past year has been accompanied by steadier, though amplified, growth in workers’ earnings. Here in British Columbia, annual increases in average weekly earnings reached a high of 4.8% in March 2022, following year-over-year increases that touched 8.8% in early 2021 and had previously peaked at 12.2% midway through 2020. For the full-year 2022, year-over-year growth in earnings averaged 3.6%, versus 2.4% in the decade ending in March 2020.
OUR 2023 OUTLOOK While we’re beginning 2023 with year-over-year wages in BC rising by 4.0%, we expect a more moderate pace of increase through the balance of the year. In our view, annual wage growth will be in the range of 2-3% by the end of 2023, which is consistent with the decade of wage growth preceding the onset of the pandemic.
WAGE GROWTH
Copyright © 2023 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 31, 2023. Data from the Greater Vancouver and Fraser Valley Boards, Statistics Canada, Zonda Urban, CMHC, & 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. 9
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