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morning business briefing

Briefing highlights

  • Inflation speeds up to 3 per cent
  • Canadian dollar pops on inflation report
  • Trump eyes end to quarterly earnings
  • A Canada Revenue scene I’d love to see
  • Musk shares details of ‘excruciating’ year
  • Eric Reguly what Tesla’s worth

Inflation speeds up

Inflation in Canada is speeding up, the annual rate hitting 3 per cent in July and raising issues for the Bank of Canada.

The Canadian dollar popped on the Statistics Canada inflation report, shooting up from about 76 US cents earlier.

Airline, travel services and energy costs, and Ottawa’s retaliatory tariffs on the U.S. helped boost the annual pace from June’s 2.5 per cent, to well beyond what was expected. Indeed, inflation now stands at its highest level since September, 2011.

On a monthly basis, consumer prices rose 0.5 per cent in July from June.

Airline prices soared 16.4 per cent for the biggest monthly jump since 1989, and are now up by more than 28 per cent on an annual basis, noted Benjamin Reitzes, Bank of Montreal’s Canadian rates and macro strategist. Travel services rose 7.5 per cent, which he said was about double the normal monthly gain.

Those costs climbed 14.2 per cent, the federal statistics agency said, citing higher costs for oil. But along with prices at the gas pump, the cost of vehicles also climbed, as did insurance premiums for driving them.

Note, too, the monthly increases in air travel, travel tours during the peak season, and the cost of phone services, which had declined in the two prior months.

Mortgage costs also rose amid interest rate increases.

“Retaliatory tariffs imposed on some U.S. items at the start of the month can only take part of the blame,” said Andrew Grantham of CIBC World Markets, citing the raft of increases that fed into the number.

This was the first inflation reading that took in Canada’s counter-tariffs on $16-billion in U.S. goods, a response to the Trump administration’s levies on steel and aluminum imports.

“I think tariffs played a small part in the strength, but only a small part,” Mr. Grantham said in an interview.

Today’s inflation report clearly has the markets thinking that the central bank will move forward with increases to its benchmark rate, though its preferred measures were stable in July.

And, thus, economists don’t think it will sway the Bank of Canada on its timeline for gradual rate increases.

“One month does not make a trend, and the core inflation measures remain anchored at 2 per cent,” said BMO’s Mr. Reitzes.

“It’s going to take more than one month of elevated inflation to convince the BoC that inflation is poised to accelerate,” he added.

“Over all, this report barely moves the needle for the September policy meeting (if at all), as there’s no need to shift away from the gradual tightening stance noted in July. We continue to expect the next BoC rate hike will come in October.”

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A scene I’d love to see

Fine, I’ll just keep it then

Photo illustration

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Trump eyes end to quarterly reports

President Donald Trump is looking at shaking up the world of corporate earnings for companies and shareholders.

Mr. Trump said via Twitter this morning that he asked the Securities and Exchange Commission to investigate the idea of moving from requiring companies to file quarterly reports to a six-month timeframe.

The president said he has discussed this with business officials, and that a half-year schedule would “allow greater flexibility & save money.”

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