Craving a week that slipped by? Here’s your weekly roundup of the Globe’s top business and investment stories, with insight and analysis from the pros, stock tips, portfolio strategies and more.
Don’t call it a comeback: Zellers is back
Hudson’s Bay Co. announced this week that it will revive discount retailer Zellers with locations in Bay Department Stores starting early next year. This follows an announcement by HBC earlier this month that the company is partnering with outdoor chain MEC to create ‘shop-in-shops’ at Hudson’s Bay Co department stores. starting this fall. As Susan Krashinsky Robertson reports, Canada’s oldest retailer will also launch an e-commerce store for Zellers that will sell home goods and furniture, toys, pet accessories and clothing. Canadians have reacted to news of the discount retailer’s return with nostalgia for the Zellers of yesteryear, which dominated suburban malls from the 1970s to the early 2000s. There’s no confirmation yet on whether the Bay will bring back Zellers mascot Zeddy or the brand’s 1950s-style restaurant, but in these inflationary times, any store where “the lowest price is the law” is welcome.
Inflation has slowed, but there is a long way to go
After months of rising inflation and a four-decade high inflation hit in June, Canada’s inflation rate slowed in July, easing to 7.7 percent from 8.1 percent the previous month. As Matt Lundy reports, gasoline prices were the main reason, falling 9.2% in July from June, but other areas – including grocery, rent and gas prices – showed less encouraging signs. The Bank of Canada predicts that inflation will not return firmly to its 2 per cent target until late 2024, meaning more rate hikes are likely to come. Financial analysts expect the bank to raise the key overnight rate by half or three-quarters of a percentage point in September.
Middle-income inflation woes
Almost every Canadian is feeling the pain of high inflation, but according to an analysis by TD Economics, middle-income households are the ones likely to get the worst of it. While Canada’s inflation rate eased slightly to 7.6% in July, for middle-income households it’s actually 8.1%, the highest of any income bracket, after adjusting for how each earner typically spends money group, according to bank economists. Why is this team getting hit so hard? Jason Kirby looks at the impact of inflation by income bracket – and offers some good news – in this week’s Decoder.
Union leaders are furious with Tiff
A growing number of labor leaders are frustrated at the Bank of Canada after Governor Tiff Macklem suggested businesses should not adjust wages to inflation despite rising consumer prices eroding profits. At a recent event, Mr Macklem said companies should not expect inflation to remain high. The comment has sparked a backlash from union leaders, who are trying to ensure their members’ wages keep pace with four-decade high inflation. However, the central bank remains wary of a wage-price spiral: a situation where both businesses and workers expect permanently higher inflation and thus correspondingly raise prices and demand higher wages in a self-reinforcing cycle. But despite the pace of wage growth in Canada – up 5.2 per cent year-over-year in July – it remains well below the Consumer Price Index, which rose 7.6 per cent over the same period.
We’re going back to the office!
The CEO of Canada’s largest bank is urging employees to return to the office more often, calling for “meeting in person more often to work and collaborate.” While Dave McKay, CEO of Royal Bank of Canada, acknowledges that flexible and hybrid work models are here to stay, he suggests that face-to-face interaction is a business necessity. RBC employs more than 89,000 workers and is asking most of them to return to the office two to three times a week until the end of September. Canada’s Big Five banks have called for a partial return to offices this spring, but many have struggled to convince workers who made permanent lifestyle changes during the pandemic that the move is worth it, writes Vanmala Subramaniam.
Renting is ruining us financially
According to personal finance rules, monthly rental costs cannot exceed 30 percent of gross pay. But in Vancouver, the average rent-to-income ratio is 53 percent, compared to 48 percent in Toronto and 40 percent in Halifax. Rent is one of the big sources of the increasing difficulty of living your life in 2022, writes Rob Carrick. Unaffordable rent cripples people financially by limiting their upward mobility and resilience. Between rent and the rising cost of everyday purchases like food and fuel, there isn’t much left to save. So what is the solution to high rents? To get a roommate, move houses or live with your parents – but these aren’t great options for most young adults. Now that you’re all caught up, prepare for the week ahead with Globe’s investment calendar. Your time is valuable. Deliver the Top Business Headlines newsletter to your inbox morning or night. Sign up today.
