RENNIE OUTLOOK 2022
INFLATION
Since the Bank of Canada adopted inflation-targeting as an official policy in 1991, consumer prices have largely remained stable, typically rising on an annualized basis within a band of 1-3%. The onset of the pandemic represented the beginning of whatwouldbea roller-coaster for consumerpricechanges inCanada,with inflationbecoming deflation inApril andMay 2020 (as prices actually fell), before bouncing between 0.1% and 1.0% through the balance of 2020. By December 2021, annual inflation had exceeded 4% for five straight months due to a combination of supply chain disruptions, low interest rates, and an accumulation of wealth for many households through the pandemic. In real estate and related sectors, rising costs are expected to continue to be a material headwind impacting new and existing housing supply-in the coming year. Supply chain knots and labour shortages are likely to keep costs elevated in the near-term.
OUR 2022 OUTLOOK While too late for some, the Bank of Canada now has inflation squarely in its sights and is expected to raise interest rates in response to the highest inflation we’ve experienced in two decades. Expect inflation to fall from its current 4.8% to 3% by the end of 2022.
CONSUMER PRICE INFLATION
WAGES
A trivially paradoxical feature of economic change in BC in 2020 was that median weekly wages (for full-time workers) in BC rose by 4.8%. Notably, this was not actually in spite of the pandemic’s negative impacts on the economy, but rather directly a result of them, as itwas primarily lower-paying jobs thatwere initially lost due to social-distancing restrictions, leaving relativelymore higher-income earners in the wage calculation by the end of 2020 than at the beginning. Asmany of these lower-paying jobswere re-activated in2021, it had theperverse effect of draggingheadlinewagegrowthdown, to 2.8% in 2021.
OUR 2022 OUTLOOK Wage inflation has not, to this point, contributed meaningfully to consumer price inflation. However, with consumer price inflation having remained elevated for much of 2021—and with the general public notably being availed of this—we will see upward pressure on wages in 2022. Expect them to rise between 3-5% this year as workers seek to keep pace with recent perceived cost-of-living changes.
WAGES
Copyright © 2022 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 February 3, 2022. 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 8
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