Inflation continues to fall as temperatures rise
As we move through the dog days of summer and warmth records are being broken around the globe, inflation in Canada is moving in the other way. Statistics Canada announced that the year-on-year increase within the Consumer Price Index (CPI) cooled to 2.7% in June. With inflation continuing to trend downward, this generally indicates that the Bank of Canada’s monetary policy is working.
Highlights of the June 2024 Consumer Price Index Report
The key findings from the monthly CPI report are:
- The core CPI (excluding food and energy) remained stubbornly higher than the headline CPI, reaching 2.9% annualized.
- The overall inflation picture continues to be dominated by housing, as prices rose by 6.2%.
- The services sector, one other major inflation problem, recorded a rise of 4.8 percent.
- Prices for durable goods fell significantly, falling by 1.8 percent year-on-year.
- Prices for clothing and shoes also fell by 3.1 percent.
- Gas prices fell 3.1% from May to June and remained fairly stable over the past 12 months.
- Food prices rose by 2.1 percent year-on-year, below the patron price index (CPI).
Business and personal sentiment surveys point to declining inflation expectations in the longer term and are vital indicators that the Bank of Canada (BoC) has succeeded in containing the worst-case scenarios of runaway inflation. The early Eighties saw an increase in jeans and very high rates of interest. While 80s fashion could come backit is sort of clear that this will not be the case with monetary policy of this era.
Many Canadians are blissful about lower inflation, but for those whose mortgages are up for renewal this month, that is probably not much consolation. The country as an entire could also be blissful about lower demand-led inflation, but that basically just means, “People have a lot less money for most things because their mortgage or rent payments just went through the roof.”
Lower inflation rates and reduced inflation sentiment should enable the BoC to slowly but surely cut rates of interest further in the approaching months. It can be shocking if the BoC didn’t cut rates of interest by 0.25% in its decision next week.
You can use this table to envision the present impact of inflation rates.
Read more: Canada’s inflation rate falls to 2.7% in June, raising hopes for a rate cut in July
Netflix subscribers have to look at nostalgic TV commercials
Last Thursday’s earnings day went largely as expected for Netflix, as profit and revenue for the last quarter were quite near the corporate’s forecast.
Netflix Earnings Highlights
The currency information on this section is in USD.
• Netflix (NFLX/NASDAQ): Earnings per share of $4.88 (versus a forecast of $4.74). Revenue of $9.56 billion (versus an estimated $9.53 billion).
Netflix sold more memberships than expected (277.65 million versus 274.40 million). The majority of this subscriber growth got here from the ad-supported platform. Markets appeared to take the news in stride, with share prices remaining largely unchanged in after-hours trading.
Netflix co-CEO Ted Sarandos stressed that the corporate will give attention to promoting going forward, saying that the streamer will not partner with Microsoft. Instead, it’s investing in its own platform. He also mentioned that Netflix’s foray into live sports would attract more promoting dollars, citing the Christmas Day NFL games specifically as a key opportunity. He summed up the corporate’s foray into live sports by saying, “We are in live sports [TV] because our members adore it and it generates plenty of engagement and excitement… and the excellent news is that advertisers adore it for the exact same reason.”
With Netflix’s share price up over 43% this 12 months and a price-to-earnings (P/E) ratio of over 44, one could argue that the stock is fairly valued and that the corporate must expertly execute its future growth plans to even justify the high price.
