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Return to Normal in 2023?

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Inflation numbers were released this morning, and it was largely good news. The headline number was 4.3% inflation, which marked the 9th consecutive month of flat or declining CPI. It's starting to seem like there's a path back to a normal economic environment after the worst inflation in decades.

The point of extreme rate increases wasn't to crush the CRE investment market, it was to control price increases that were completely out of hand. So far, the results are looking good, even with the "pause" the last two announcements. Remember this doesn't mean prices are dropping, just that the rate of increase is slowing. Even Statistics Canada notes that prices are "elevated" and that compared to late 2021, consumer prices are +9% across the board.

OK so let the rate cuts begin! Hold on, I don't think we're there yet. While 4.3% is a big improvement, it's still well above the "target" inflation rate. We need to make sure inflation continues to drop. Secondly, inflation isn't evenly distributed, and it seems to be very "sticky" in the non-negotiable areas. While many spending categories have moved into the Bank's target range of 1-3%, that food number is alarming. Does the Bank of Canada see that as a problem that merits further increases? Or is it a small consideration compared to the effects on the investment side of the economy? I don't know, and I'm not sure anyone outside the government does.

Research Weekly Insights Genie is going back

Summary
The latest inflation rate of 4.3% is well below the 2022 peak of 8.1%, but the cost of essentials such as food and health care continue to grow rapidly.

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Pour plus d’informations, veuillez contacter:

Adam Jacobs

Head of Research | Canada

Toronto Downtown

Colliers Canada's head of research, leading a cross-country team of 20 mapping, analytics and research professionals. Formerly head of Canada research at Cushman Wakefield and Director of Analytics at Oxford Properties. Featured in mainstream publications such as the Toronto Star, industry publications and podcasts. Specializing in the big picture and the fundamentals driving real estate - demographics, the macro environment and the global economy. 

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