CityNews.ca Staff
It's finally going to happen - a way for you to get to Pearson International Airport by subway. It's part of a huge transit funding announcement made on Wednesday that will forever change the way you get around in the city.
The provincial money is coming from the recently announced stimulus packages designed to get Toronto moving - and building - again. Some of the transit plans have been in the works for a while, but up until now we never knew when both the money and the go-ahead would come together.
It appears that time has arrived and the announcement covers four new distinct changes that will affect the entire the GTA.
The most significant one involves the airport, with a 30-kilometre long rapid transit line on Eglinton Ave. set to move travellers from Kennedy station to PIA. Some of the new track - from Leslie to Keele - will be underground, the rest above the surface. That part will resemble a modernized version of the current route that runs along Spadina.
It's been a cherished dream of travellers for years, because airport parking is expensive, it's often difficult to get to and navigating the maze of the giant complex can be a challenge even for those who are familiar with the layout. It's expected to be completed by 2016.
The other major Toronto project involves a new rapid transit line that will extend the Yonge subway system from Finch to Highway 27 and Humber College, and then east to Don Mills. That one should be ready in just four years.
The Scarborough LRT will also be upgraded and expanded by 2015.
And congestion in York Region will be eased by an expansion of the Viva line, featuring more buses, more stations and dedicated bus lanes. That one is about four years away from reality, too.
There will also be a study launched to find the best way to improve Hamilton's transit system.
The plans are worth a total of $9 billion and will create thousands of job. And while many had been in the background for years, there was always a lack of funds to get them started. This announcement promises shovels in the ground almost immediately.
"The projects we're announcing today are only the start," promises Premier Dalton McGuinty. "Together, we are taking a big step towards our broad vision for regional transit for the GTA. It's the most ambitious project of its kind in Canadian history."
A beaming Mayor David Miller could hardly contain his excitement about the projects, which he's been working towards for years.
"It means that no longer will someone who lives in northeast Scarborough and works in southwest Etobicoke have to spend hours taking four different modes of public transit to get from 'A' to 'B'," he proclaims. "They'll be able to navigate the city and the region quickly, efficiently and reliably."
Many commuters hope the plans - especially the airport link - flies soon. "It's a great idea and will provide easier transport for people working downtown and living downtown," praises one traveller, who had to get to Pearson some other way on Wednesday.
But while the new facilities will be welcome and most will agree they're badly needed in congestion clogged Toronto, it won't come without some pain. Those with businesses on Eglinton and Finch Aves. are bracing for disruptions that could last years as the projects are put into place.
"I think it's a great idea," admits Larry Visiladis of Alexis Hair Design on Eglinton. "The only concern I have is how long this will take and how much disruption with the neighbourhood while the construction is going on."
McGuinty admits it will be tough for a while. "I think we have to be honest at the outset. No way we do this without creating some disruption."
But at the other end, those businesses will suddenly find themselves on a subway line and that may increase traffic because their stores will be easier to reach. If they can survive the long construction it takes to reach that point.
For more goto to johnathanvrozos.ca Johnathan Vrozos
Showing posts with label Ontario. Show all posts
Showing posts with label Ontario. Show all posts
Wednesday, April 1, 2009
Monday, March 30, 2009
Canada bails out carmakers, says they could fail
By John McCrank and Randall Palmer
TORONTO/OTTAWA (Reuters) - Canada joined the tough talk of the Obama administration about the auto industry on Monday, saying no car maker is too big to fail, but it nonetheless offered billions of dollars in bridge financing to the Canadian units of General Motors and Chrysler.
Industry Minister Tony Clement said the plans set out by GM Canada and Chrysler thus far fall short of making them viable and called for further concessions all around.
"The old rule book is thrown out the window. I don't think anything is too big to fail, but we're going to give it our best shot at having a restructured auto sector and this is all part of it," Clement told CBC television.
He made the statement after announcing C$4 billion ($3.2 billion) in loans to tide the two automakers over while they come up with new restructuring plans.
The governments of Canada and the province of Ontario will provide Chrysler with C$1 billion, advancing C$250 million right away. They will distribute another C$500 million in early April and the remainder as of May 1.
"Very clearly, if the money had not been forwarded today, (Chrysler) would not have been able to meet payroll today or tomorrow," Clement told a news conference in Ottawa.
"So we were faced with this choice of a disorderly bankruptcy ... We felt now was the time to announce this."
GM is eligible for up to C$3 billion in bridge loans and the government said it hoped to close that deal "very soon".
Ottawa and Ontario first announced the short-term financing in December but neither company has drawn on it.
Canada will provide no further financing unless acceptable plans are produced. If they aren't, the government would have the option of calling the loans.
In addition to proving their viability, the companies will have to commit to maintaining 20 percent of their North American production in Canada.
On Monday, Washington demanded tough new restructuring plans at GM and Chrysler and forced out GM's chief executive.
Clement said the Canadian and U.S. governments were working closely on the file. He said Ottawa endorsed plans arrived at jointly with the United States under which Chrysler would have until the end of April to come up with a viability plan that must include a link-up with Italy's Fiat SpA.
LABOR CONCESSIONS
Chrysler will also have to find a compromise with the Canadian Auto Workers union on cutting labor costs, while Canada says a deal that the union already cut with GM does not go far enough.
The union recently agreed to reopen the three-year contract deals it reached with the companies last May to help GM and Chrysler qualify for government aid.
Earlier this month, the CAW reached a deal with GM that the company said will eliminate nearly C$1 billion of costs related to its retired workers from its books, on top of cutting active labor costs by more than C$7 an hour.
Chrysler has said it needs a better deal from the union, or it could be forced to pull its operations out of Canada.
Clement said the GM-CAW deal falls short of what's required.
The Canadian government is "expecting General Motors and the CAW to continue their discussions, particularly on the issue of legacy costs where it has become apparent there wasn't as much progress as we would have liked to have seen," he said, referring to costs related to retiree benefits.
CAW President Ken Lewenza dismissed the idea of reopening the contract with GM to address legacy costs, saying there was nothing the union could do even if it wanted to.
"You can't do it in bargaining, and nor will we," he said at a press conference in Toronto. "I mean, at the end of the day, it's not legal to say to pensioners that you're not entitled to the pension benefits that you left on."
However, Clement said that if the companies enter bankruptcy protection in the United States, they would do the same in Canada, and the unions would then be forced to take a "haircut" along with everyone else.
"While we believe in the long-term viability of these companies, I agree with President Obama that we must also consider the possibility of court-supervised restructuring," he said.
Later, he elaborated to the CBC: "Bankruptcy protection is a whole new ball game for unions as well as for pension holders and others. I would suggest to them that it's in their best interest to start discussing these things directly with the companies."
Lewenza said the union would be willing to sit down with the federal and provincial governments, and the companies, to look at the possibility of setting up a plan similar to what the United Auto Workers union and the companies have agreed.
In the United States, GM and Chrysler have obligations to a retiree healthcare trust, known as a Voluntary Employee Beneficiary Association, and are pushing the UAW to allow them to pay the union in stock rather than cash for half of the remaining obligations.
($1=$1.26 Canadian)
(Additional reporting by Louise Egan and David Ljunggren; Editing by Peter Galloway)
TORONTO/OTTAWA (Reuters) - Canada joined the tough talk of the Obama administration about the auto industry on Monday, saying no car maker is too big to fail, but it nonetheless offered billions of dollars in bridge financing to the Canadian units of General Motors and Chrysler.
Industry Minister Tony Clement said the plans set out by GM Canada and Chrysler thus far fall short of making them viable and called for further concessions all around.
"The old rule book is thrown out the window. I don't think anything is too big to fail, but we're going to give it our best shot at having a restructured auto sector and this is all part of it," Clement told CBC television.
He made the statement after announcing C$4 billion ($3.2 billion) in loans to tide the two automakers over while they come up with new restructuring plans.
The governments of Canada and the province of Ontario will provide Chrysler with C$1 billion, advancing C$250 million right away. They will distribute another C$500 million in early April and the remainder as of May 1.
"Very clearly, if the money had not been forwarded today, (Chrysler) would not have been able to meet payroll today or tomorrow," Clement told a news conference in Ottawa.
"So we were faced with this choice of a disorderly bankruptcy ... We felt now was the time to announce this."
GM is eligible for up to C$3 billion in bridge loans and the government said it hoped to close that deal "very soon".
Ottawa and Ontario first announced the short-term financing in December but neither company has drawn on it.
Canada will provide no further financing unless acceptable plans are produced. If they aren't, the government would have the option of calling the loans.
In addition to proving their viability, the companies will have to commit to maintaining 20 percent of their North American production in Canada.
On Monday, Washington demanded tough new restructuring plans at GM and Chrysler and forced out GM's chief executive.
Clement said the Canadian and U.S. governments were working closely on the file. He said Ottawa endorsed plans arrived at jointly with the United States under which Chrysler would have until the end of April to come up with a viability plan that must include a link-up with Italy's Fiat SpA.
LABOR CONCESSIONS
Chrysler will also have to find a compromise with the Canadian Auto Workers union on cutting labor costs, while Canada says a deal that the union already cut with GM does not go far enough.
The union recently agreed to reopen the three-year contract deals it reached with the companies last May to help GM and Chrysler qualify for government aid.
Earlier this month, the CAW reached a deal with GM that the company said will eliminate nearly C$1 billion of costs related to its retired workers from its books, on top of cutting active labor costs by more than C$7 an hour.
Chrysler has said it needs a better deal from the union, or it could be forced to pull its operations out of Canada.
Clement said the GM-CAW deal falls short of what's required.
The Canadian government is "expecting General Motors and the CAW to continue their discussions, particularly on the issue of legacy costs where it has become apparent there wasn't as much progress as we would have liked to have seen," he said, referring to costs related to retiree benefits.
CAW President Ken Lewenza dismissed the idea of reopening the contract with GM to address legacy costs, saying there was nothing the union could do even if it wanted to.
"You can't do it in bargaining, and nor will we," he said at a press conference in Toronto. "I mean, at the end of the day, it's not legal to say to pensioners that you're not entitled to the pension benefits that you left on."
However, Clement said that if the companies enter bankruptcy protection in the United States, they would do the same in Canada, and the unions would then be forced to take a "haircut" along with everyone else.
"While we believe in the long-term viability of these companies, I agree with President Obama that we must also consider the possibility of court-supervised restructuring," he said.
Later, he elaborated to the CBC: "Bankruptcy protection is a whole new ball game for unions as well as for pension holders and others. I would suggest to them that it's in their best interest to start discussing these things directly with the companies."
Lewenza said the union would be willing to sit down with the federal and provincial governments, and the companies, to look at the possibility of setting up a plan similar to what the United Auto Workers union and the companies have agreed.
In the United States, GM and Chrysler have obligations to a retiree healthcare trust, known as a Voluntary Employee Beneficiary Association, and are pushing the UAW to allow them to pay the union in stock rather than cash for half of the remaining obligations.
($1=$1.26 Canadian)
(Additional reporting by Louise Egan and David Ljunggren; Editing by Peter Galloway)
Monday, March 23, 2009
Stock markets jump on Suncor-PetroCan merger, U.S. bank plan
By Malcolm Morrison, The Canadian Press
TORONTO - New life has been breathed into the March stock market rally by a major deal in the Canadian energy sector and another stab at helping American banks remove as much as US$1 trillion in bad loans from their books.
Toronto's S&P/TSX composite index surged 367.3 points to 8,873.6 late in the morning after Suncor Energy Inc. (TSX:SU) and Petro-Canada (TSX:PCA) announced a merger in an all-stock deal creating a combined company valued at $43.3 billion.
The new enterprise is to operate under the Suncor name with existing Petro-Canada shareholders owning 40 per cent.
The Canadian dollar was ahead 0.61 of a cent to 81.29 cents US.
New York's Dow Jones industrial average gained 280 points to 7,558.4.
The Nasdaq composite index jumped 52.16 points to 1,509.43. The S&P 500 index moved up 30.15 points to 798.7 after the Treasury Department announced a plan to revive lending that would rely on the government's US$700-billion financial rescue fund, the Federal Reserve and the Federal Deposit Insurance Corp., as well as private investors.
TORONTO - New life has been breathed into the March stock market rally by a major deal in the Canadian energy sector and another stab at helping American banks remove as much as US$1 trillion in bad loans from their books.
Toronto's S&P/TSX composite index surged 367.3 points to 8,873.6 late in the morning after Suncor Energy Inc. (TSX:SU) and Petro-Canada (TSX:PCA) announced a merger in an all-stock deal creating a combined company valued at $43.3 billion.
The new enterprise is to operate under the Suncor name with existing Petro-Canada shareholders owning 40 per cent.
The Canadian dollar was ahead 0.61 of a cent to 81.29 cents US.
New York's Dow Jones industrial average gained 280 points to 7,558.4.
The Nasdaq composite index jumped 52.16 points to 1,509.43. The S&P 500 index moved up 30.15 points to 798.7 after the Treasury Department announced a plan to revive lending that would rely on the government's US$700-billion financial rescue fund, the Federal Reserve and the Federal Deposit Insurance Corp., as well as private investors.
Suncor, Petro-Canada merge to create company worth $43.3 billion
By Lauren Krugel, The Canadian Press
CALGARY - Suncor Energy Inc. (TSX: SU.TO) and formerly government-owned Petro-Canada (TSX: PCA.TO) are merging to create a $43.3-billion global energy giant, which executives from both firms say will thrive in the economic downturn.
The combined company, which will operate under the Suncor name, will be the largest energy company in Canada and the fifth largest in North America.
"It's a made-in-Canada response to the challenges presented by global market uncertainty today, and more importantly it's a made-in-Canada strategy to unleash the potential of these two great companies and their people in the future," Petro-Canada CEO Ron Brenneman said on a conference call with analysts Monday.
"We need to face head-on the issue of global competition in a time of economic uncertainty. In these difficult times, we believe that joining forces provides the strength we need to be a leader in value creation in an extremely competitive industry."
Petro-Canada shareholders would own 40 per cent of the new Calgary-headquartered entity, assuming a proposed share swap approved by the boards of the two companies goes through as planned.
The companies, both headquartered in Calgary, both active in the Alberta oilsands and both involved in refining and retailing, say their plan will reduce their costs by $300 million at a time when Alberta's oilpatch grapples with tough economic conditions.
Petro-Canada shares (TSX: PCA.TO) shot up nearly 24 per cent in morning trading on the Toronto Stock Exchange, rising $7.09 to C$36.74 while Suncor's stock gained five per cent, or $1.60 cents to C$32.50.
Petro-Canada's portfolio spans Canada and the globe, with assets in the oilsands, the East Coast, Libya, the North Sea and elsewhere.
By contrast, Suncor, the oldest and second-largest oilsands operator, has bulk of its activities centred around that industry.
Suncor chief executive Rick George told the conference call that the merged company would be focused on Canada and the oilsands, but that all of the assets will be evaluated.
"This will be a very disciplined approach. It will not be scattergun. But it will be a Canadian oilsands-centric type of strategy," George said.
While the combined entity will keep the Suncor name on the corporate level, Petro-Canada's brand will remain when it comes to selling refined products like gasoline and diesel.
"What we're trying to do here is take advantage of the brand value that both of these companies represent. We believe that Suncor has an excellent brand recognition in the investment community and that's why we've chosen together to go forward with the Suncor name corporately," said Brenneman.
"But we also recognize that Petro-Canada has the No. 1 brand recognition in the Canadian marketplace and so we want to take advantage of that by marketing our petroleum products jointly through the Petro-Canada brand."
Current Suncor shareholders receive a share in the new venture for each Suncor share they own, and collectively own 60 per cent, while investors who own Petro-Canada stock will receive 1.28 shares of the new company for each share they hold.
The deal values Petro-Canada at $19.18 billion based on Friday's closing prices on the Toronto Stock Exchange. The new corporation boasts 7.5 billion barrels of oil equivalent per day in proved and probable reserves, the two companies said.
The deal, which is subject to regulatory and shareholder approval, is slated to close in the third quarter of 2009.
The companies said the merged corporation will continue to be bound by the Petro-Canada Public Participation Act, a piece of federal legislation that prohibited any group from holding more than 20 per cent of voting shares in the former Crown corporation.
In accordance with the act, the new company will be based in Calgary, where headquarters for both Suncor and Petro-Canada are currently located.
The merged entity will be smaller than other global heavyweights such as Exxon Mobil (NYSE: XOM) and ConocoPhillips (NYSE: CP), which boast market capitalizations of US$326.6 billion and US$55.97 billion respectively.
However, the takeover of Petro-Canada signals the end of an integrated oil company first created by Pierre Trudeau's Liberal government in the 1970s to assert Canadian control over the country's energy sector.
The deal comes weeks after the Ontario Teachers Pension Plan, which holds a 3.3 per cent stake in Petro-Canada, launched action aimed at increasing shareholder value in the company. Reports said the province's largest pension fund was pushing for restructuring at the oil and gas firm.
Suncor and Petro-Canada are among the many Canadian energy firms to put off building massive oilsands projects due to languishing commodity prices and rattled financial markets.
Analysts say a fully integrated oilsands project, in which the oil is both extracted and processed, need oil prices of anywhere from US$75 to US$100 per barrel to be economically viable. Crude prices were trading at more than US$52 early Monday, but have been much lower in recent months.
George said in January that two of the company's major oilsands projects would be put into "safe mode" for the time being.
Phases 3 through 6 of its steam-assisted gravity drainage Firebag oilsands project have been shelved, as have plans to build an upgrader to process bitumen from its Voyageur mine into refinery-ready synthetic crude oil.
-With files from Michelle McQuigge in Toronto
CALGARY - Suncor Energy Inc. (TSX: SU.TO) and formerly government-owned Petro-Canada (TSX: PCA.TO) are merging to create a $43.3-billion global energy giant, which executives from both firms say will thrive in the economic downturn.
The combined company, which will operate under the Suncor name, will be the largest energy company in Canada and the fifth largest in North America.
"It's a made-in-Canada response to the challenges presented by global market uncertainty today, and more importantly it's a made-in-Canada strategy to unleash the potential of these two great companies and their people in the future," Petro-Canada CEO Ron Brenneman said on a conference call with analysts Monday.
"We need to face head-on the issue of global competition in a time of economic uncertainty. In these difficult times, we believe that joining forces provides the strength we need to be a leader in value creation in an extremely competitive industry."
Petro-Canada shareholders would own 40 per cent of the new Calgary-headquartered entity, assuming a proposed share swap approved by the boards of the two companies goes through as planned.
The companies, both headquartered in Calgary, both active in the Alberta oilsands and both involved in refining and retailing, say their plan will reduce their costs by $300 million at a time when Alberta's oilpatch grapples with tough economic conditions.
Petro-Canada shares (TSX: PCA.TO) shot up nearly 24 per cent in morning trading on the Toronto Stock Exchange, rising $7.09 to C$36.74 while Suncor's stock gained five per cent, or $1.60 cents to C$32.50.
Petro-Canada's portfolio spans Canada and the globe, with assets in the oilsands, the East Coast, Libya, the North Sea and elsewhere.
By contrast, Suncor, the oldest and second-largest oilsands operator, has bulk of its activities centred around that industry.
Suncor chief executive Rick George told the conference call that the merged company would be focused on Canada and the oilsands, but that all of the assets will be evaluated.
"This will be a very disciplined approach. It will not be scattergun. But it will be a Canadian oilsands-centric type of strategy," George said.
While the combined entity will keep the Suncor name on the corporate level, Petro-Canada's brand will remain when it comes to selling refined products like gasoline and diesel.
"What we're trying to do here is take advantage of the brand value that both of these companies represent. We believe that Suncor has an excellent brand recognition in the investment community and that's why we've chosen together to go forward with the Suncor name corporately," said Brenneman.
"But we also recognize that Petro-Canada has the No. 1 brand recognition in the Canadian marketplace and so we want to take advantage of that by marketing our petroleum products jointly through the Petro-Canada brand."
Current Suncor shareholders receive a share in the new venture for each Suncor share they own, and collectively own 60 per cent, while investors who own Petro-Canada stock will receive 1.28 shares of the new company for each share they hold.
The deal values Petro-Canada at $19.18 billion based on Friday's closing prices on the Toronto Stock Exchange. The new corporation boasts 7.5 billion barrels of oil equivalent per day in proved and probable reserves, the two companies said.
The deal, which is subject to regulatory and shareholder approval, is slated to close in the third quarter of 2009.
The companies said the merged corporation will continue to be bound by the Petro-Canada Public Participation Act, a piece of federal legislation that prohibited any group from holding more than 20 per cent of voting shares in the former Crown corporation.
In accordance with the act, the new company will be based in Calgary, where headquarters for both Suncor and Petro-Canada are currently located.
The merged entity will be smaller than other global heavyweights such as Exxon Mobil (NYSE: XOM) and ConocoPhillips (NYSE: CP), which boast market capitalizations of US$326.6 billion and US$55.97 billion respectively.
However, the takeover of Petro-Canada signals the end of an integrated oil company first created by Pierre Trudeau's Liberal government in the 1970s to assert Canadian control over the country's energy sector.
The deal comes weeks after the Ontario Teachers Pension Plan, which holds a 3.3 per cent stake in Petro-Canada, launched action aimed at increasing shareholder value in the company. Reports said the province's largest pension fund was pushing for restructuring at the oil and gas firm.
Suncor and Petro-Canada are among the many Canadian energy firms to put off building massive oilsands projects due to languishing commodity prices and rattled financial markets.
Analysts say a fully integrated oilsands project, in which the oil is both extracted and processed, need oil prices of anywhere from US$75 to US$100 per barrel to be economically viable. Crude prices were trading at more than US$52 early Monday, but have been much lower in recent months.
George said in January that two of the company's major oilsands projects would be put into "safe mode" for the time being.
Phases 3 through 6 of its steam-assisted gravity drainage Firebag oilsands project have been shelved, as have plans to build an upgrader to process bitumen from its Voyageur mine into refinery-ready synthetic crude oil.
-With files from Michelle McQuigge in Toronto
Friday, March 20, 2009
Canadian inflation rises a more-than-expected 1.4 per cent in February
By Julian Beltrame, The Canadian Press
OTTAWA - Canadian inflation jumped more than expected in February, reversing a five-month trend toward lower prices and calming concerns of deflation.
Statistics Canada reported Thursday a sizable 0.7 per cent price increase from January to February and said the annual inflation rate rose to 1.4 per cent - not a large number but significant given that overall inflation had been falling since September.
The Bank of Canada had forecast prices could drop in the absolute during the second and third quarters of this year, raising the spectre of deflation - which comes with fears of nasty spirals in which prices and wages fall in a vicious downward cycle.
But the 0.3 percentage point annual inflation increase from January's 1.1 per cent rate makes that "a remote risk," said Douglas Porter, deputy chief economist with BMO Capital Markets.
"I think there's just a little more underlying pressure on inflation and it's coming partly from the steady rebound in gasoline prices we've seen since the start of the year and partly from the impact of the lower Canadian dollar," Porter said, adding that it has decreased the odds that prices will dip into negative territory for longer than a few months this year.
Porter said the central bank may still resort to non-traditional means of stimulating economic activity - now that interest rates are too low too drop much further - but said it would almost certainly be less dramatic than what the U.S. Federal Reserve has done.
Labour economist Erin Weir of the United Steelworkers also welcomed the slight uptick in inflation as a sign that deflation is diminishing as a concern.
But he cautioned that the Canadian economy remains in need of stimulus and urged Bank of Canada governor Mark Carney to continue with his monetary easing policies.
"The Bank of Canada was right to raise the possibility of credit and quantitative easing and should also consider targeting a zero per cent interest rate," he said.
The Canadian dollar was up 0.56 cent to 80.80 cents US on Thursday after soaring by as much as 1.78 cents earlier in the day to 82.02 cents, the first time it had been above 82 cents since early February.
The currency markets sold off U.S. dollars on concerns of future price escalation in the United States following the Fed's announcement Wednesday afternoon that it will buy up to US$300 billion in Treasury bonds.
"It's a primarily U.S. selling story rather than a Canadian buying story," said Sacha Tihanyi, a currency strategist with Scotia Capital.
"The Federal Reserve announcement spooked currency marketers because they are afraid that could stoke inflation and devalue the currency."
He said the loonie's rise was not as pronounced as other major currencies, mostly because of suggests that Carney may also resort to quantitative easing if credit conditions don't improve.
Porter said the lower loonie is especially being reflected in food costs, since a significant portion of what Canadians eat is imported, especially during the winter months.
The next move by the Canadian central bank is likely to cut the overnight interest rate on April 21, Porter predicted, and if more measures are needed, would likely limit quantitative easing to purchasing commercial paper.
The central bank governor said last weekend that Canada's economy is proving weaker than expected, increasing the chances he will take some action in April to try and make credit to business and consumers more available and cheaper.
The big danger in increasing the money supply, cautioned Porter, is that central banks overshoot by printing too much money and ignite a serious inflation problem.
Although the annual inflation increase was higher than economists had expected, the uptick was moderate and not a total surprise given that U.S. inflation also rose slightly during the month after declining for some time.
Leading the charge was food prices, which have been rising for almost a year.
The cost of food prices at grocery stores rose 8.9 per cent in February, but particularly pronounced was the 25.8 per cent spike in fresh vegetables, 9.7 per cent increase in baked goods and cereal and a 6.1 per cent rise in meat prices.
The inflation rate in Canada would already be close to zero if food was taken out of the calculation, Statistics Canada said.
Shelter costs due to higher mortgage costs also rose in February by three per cent, although that was lower than the 3.3 per cent year-over-year rise the previous month.
But gasoline prices remain the major drag on inflation in Canada.
Although the cost of filling up rose 5.6 per cent last month from January, gas prices were still 19.7 per cent lower than they were a year ago and continue to apply downward price pressure on transportation costs in general.
Also lower in February was the cost purchasing and leasing a passenger vehicle, down 6.4 per cent from last year, clothing, footwear, household appliances and home entertainment equipment.
Wages are also moderating. Canadian wage increases eased to just 2.1 per cent in January from 3.1 per cent in December.
The Bank of Canada core inflation rate, which excludes energy and some food costs, remained 1.9 per cent, near the two-per-cent desired target.
Regionally, prices tended to increase most in the prairie provinces last month and least in the Atlantic provinces. Inflation ranged from 2.6 per cent in Saskatchewan to a meagre 0.3 per cent in New Brunswick.
OTTAWA - Canadian inflation jumped more than expected in February, reversing a five-month trend toward lower prices and calming concerns of deflation.
Statistics Canada reported Thursday a sizable 0.7 per cent price increase from January to February and said the annual inflation rate rose to 1.4 per cent - not a large number but significant given that overall inflation had been falling since September.
The Bank of Canada had forecast prices could drop in the absolute during the second and third quarters of this year, raising the spectre of deflation - which comes with fears of nasty spirals in which prices and wages fall in a vicious downward cycle.
But the 0.3 percentage point annual inflation increase from January's 1.1 per cent rate makes that "a remote risk," said Douglas Porter, deputy chief economist with BMO Capital Markets.
"I think there's just a little more underlying pressure on inflation and it's coming partly from the steady rebound in gasoline prices we've seen since the start of the year and partly from the impact of the lower Canadian dollar," Porter said, adding that it has decreased the odds that prices will dip into negative territory for longer than a few months this year.
Porter said the central bank may still resort to non-traditional means of stimulating economic activity - now that interest rates are too low too drop much further - but said it would almost certainly be less dramatic than what the U.S. Federal Reserve has done.
Labour economist Erin Weir of the United Steelworkers also welcomed the slight uptick in inflation as a sign that deflation is diminishing as a concern.
But he cautioned that the Canadian economy remains in need of stimulus and urged Bank of Canada governor Mark Carney to continue with his monetary easing policies.
"The Bank of Canada was right to raise the possibility of credit and quantitative easing and should also consider targeting a zero per cent interest rate," he said.
The Canadian dollar was up 0.56 cent to 80.80 cents US on Thursday after soaring by as much as 1.78 cents earlier in the day to 82.02 cents, the first time it had been above 82 cents since early February.
The currency markets sold off U.S. dollars on concerns of future price escalation in the United States following the Fed's announcement Wednesday afternoon that it will buy up to US$300 billion in Treasury bonds.
"It's a primarily U.S. selling story rather than a Canadian buying story," said Sacha Tihanyi, a currency strategist with Scotia Capital.
"The Federal Reserve announcement spooked currency marketers because they are afraid that could stoke inflation and devalue the currency."
He said the loonie's rise was not as pronounced as other major currencies, mostly because of suggests that Carney may also resort to quantitative easing if credit conditions don't improve.
Porter said the lower loonie is especially being reflected in food costs, since a significant portion of what Canadians eat is imported, especially during the winter months.
The next move by the Canadian central bank is likely to cut the overnight interest rate on April 21, Porter predicted, and if more measures are needed, would likely limit quantitative easing to purchasing commercial paper.
The central bank governor said last weekend that Canada's economy is proving weaker than expected, increasing the chances he will take some action in April to try and make credit to business and consumers more available and cheaper.
The big danger in increasing the money supply, cautioned Porter, is that central banks overshoot by printing too much money and ignite a serious inflation problem.
Although the annual inflation increase was higher than economists had expected, the uptick was moderate and not a total surprise given that U.S. inflation also rose slightly during the month after declining for some time.
Leading the charge was food prices, which have been rising for almost a year.
The cost of food prices at grocery stores rose 8.9 per cent in February, but particularly pronounced was the 25.8 per cent spike in fresh vegetables, 9.7 per cent increase in baked goods and cereal and a 6.1 per cent rise in meat prices.
The inflation rate in Canada would already be close to zero if food was taken out of the calculation, Statistics Canada said.
Shelter costs due to higher mortgage costs also rose in February by three per cent, although that was lower than the 3.3 per cent year-over-year rise the previous month.
But gasoline prices remain the major drag on inflation in Canada.
Although the cost of filling up rose 5.6 per cent last month from January, gas prices were still 19.7 per cent lower than they were a year ago and continue to apply downward price pressure on transportation costs in general.
Also lower in February was the cost purchasing and leasing a passenger vehicle, down 6.4 per cent from last year, clothing, footwear, household appliances and home entertainment equipment.
Wages are also moderating. Canadian wage increases eased to just 2.1 per cent in January from 3.1 per cent in December.
The Bank of Canada core inflation rate, which excludes energy and some food costs, remained 1.9 per cent, near the two-per-cent desired target.
Regionally, prices tended to increase most in the prairie provinces last month and least in the Atlantic provinces. Inflation ranged from 2.6 per cent in Saskatchewan to a meagre 0.3 per cent in New Brunswick.
Canadian dollar soars against American currency as oil, gold rise
By The Canadian Press
TORONTO - The Canadian dollar is soaring as the American buck falls and key commodities rise following the U.S. central bank's latest efforts to stimulate the economy.
The loonie was up 1.09 cents at midmorning, taking the Canadian dollar to 81.33 cents US. The Canadian currency had been up by as much as 1.78 cents early in the session.
RBC Capital analyst George Davis says the loonie is taking flight because of the American dollar's weakness against most other currencies and because of a spike in oil and gold prices.
The American dollar has fallen because of worries that the latest moves by the Federal Reserve will stoke inflation. In turn, investors have turned to crude oil and gold bullion as protection against inflation.
Gold futures contracts were up more than $66 to US$955 an ounce and crude oil futures were up $3.88 to US$52.02 a barrel in New York in early trading.
Earlier in the day, the Canadian dollar briefly rose above 82 cents US for the first time since early February.
TORONTO - The Canadian dollar is soaring as the American buck falls and key commodities rise following the U.S. central bank's latest efforts to stimulate the economy.
The loonie was up 1.09 cents at midmorning, taking the Canadian dollar to 81.33 cents US. The Canadian currency had been up by as much as 1.78 cents early in the session.
RBC Capital analyst George Davis says the loonie is taking flight because of the American dollar's weakness against most other currencies and because of a spike in oil and gold prices.
The American dollar has fallen because of worries that the latest moves by the Federal Reserve will stoke inflation. In turn, investors have turned to crude oil and gold bullion as protection against inflation.
Gold futures contracts were up more than $66 to US$955 an ounce and crude oil futures were up $3.88 to US$52.02 a barrel in New York in early trading.
Earlier in the day, the Canadian dollar briefly rose above 82 cents US for the first time since early February.
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