On a sunny day in June last year, my wife and I went to “just look” at a puppy and came home two hours later with the world’s most cuddly trash compactor. Murph, a chaotic Chesadoodle who turned 1 this week, gnaws into oblivion anything within her growing reach: my glasses, my wife’s glasses, my son’s stuffies, my wife’s replacement glasses, and a cherished pair of headphones purchased after months of exhaustive research. She eats food, too, but only as a last resort.
Maybe you could forgive my confusion, then, when I read Pippa Norman’s story on a pawsh new trend: restaurants catering to people with menus just for their pets. They’re all good dogs, I’m sure, but they’re getting spoiled more and more by a new breed of consumers who are pushing through stubbornly high inflation and providing a new measure of the economy’s health. Today, we square that trend against a new inflation report that shows the price of goods in Canada remains decidedly unappetizing.
The news now:
- Slate Office REIT defaults on debt as it struggles through restructuring plan
- Aimia, Aeroplan’s former owner, is squaring off with its largest shareholder yet again
- Haisla Nation and Pembina forge ahead with Indigenous-led Cedar LNG project in northern B.C.
- Central banks urged to ‘raise their game’ in face of AI disruption
Economy
Rising inflation dims expectations for a July interest rate cut
Food inflation ticked higher in Canada in May for the first time in nearly a year.Cole Burston/The Canadian Press
Consumers in Canada are facing rising prices across the board – in pet food, groceries, cellular plans, travel and rent.
Statistics Canada’s newest inflation report surprised economists and analysts, who had expected the May data to show a continued slowing in the price of goods.
The Consumer Price Index rose 2.9 per cent in May on a year-over-year basis, up from 2.7 per cent in April. Financial analysts were expecting an easing to 2.6 per cent.
So, anyone hoping for lower borrowing costs to buy a house or soften the blow from approaching mortgage renewals might have to wait. With inflation coming in above expectations, economists say another cut after the Bank of Canada’s move last month is in doubt.
Douglas Porter, chief economist at BMO Capital Markets, must have seen the pet-menu story: “No bones about it, this is not what the Bank of Canada wanted to see at this point, and clearly shaves the odds of a follow-up July rate cut,” he said in a note to clients.
Zooming in: Traders have also adjusted their bets for the central bank’s next move, putting the odds of another cut at 45 per cent – down from 65 per cent prior to the report. Darcy Keith breaks down the market’s “implied probabilities” in this story.
Zooming out: A rise in prices over the long term is not necessarily on the horizon, said Jules Boudreau, senior economist at Mackenzie Investments. “A sustained bounce in inflation is very unlikely, given the sluggish state of the economy and the disinflationary trend around the world. The Bank of Canada won’t miss the forest for the trees. Multiple rate cuts are still on the table for the rest of 2024.”
What’s next: The Bank of Canada will have a heap of economic data to consider before its next decision on July 24, Matt Lundy reports. On Friday, Statscan sizes up Canada’s gross domestic product for April, along with a preliminary estimate for May. Real GDP was unchanged in March after a strong start to the year.
Spotlight
The pet effect
From left, Gosia Socha with Iggy the dog, and Pickles Lavey with Beastley the dog at Sweaty Betty's in Toronto.Sarah Palmer/The Globe and Mail
A new breed of consumers is spending through the storm.
A spike in disposable income during the height of the COVID-19 pandemic spurred an increase in Canadians welcoming pets into their family, Pippa Norman reports.
Where ‘bark’ means ‘beer me’
Across the country, restaurants, bars and breweries are capitalizing on an increasing number of pet owners keen to bring their dogs to dinner and drinks.
- May Brand, the owner of Toronto’s famous/infamous Sweaty Betty’s, said she has seen the number of customers coming in with their dogs increase to about 50 per cent during the summer months since introducing a mini bar featuring canine ales and a variety of dog treats.
- A&W introduced a $2 “Pup Patty” as part of a promotion to raise money for service dog organizations. It was an off-menu item at first, but the chain made it official after seeing strong sales.
- In Port Moody, B.C., Moody Ales & Co. Lounge said the brewery introduced “Pup Flights” last year, after realizing it had games and colouring books for children but was lacking in offerings for pets.
Why the rise?
Reporters Chris Hannay and Erica Alini found the costs of pet food and drugs were driven up by a boom in adoptions, a long-standing shortage of veterinarians and global manufacturing issues.
A spike in disposable income led to an increase in pet purchases, which propelled a phenomenon the industry is calling the “humanization of pets.” And more people are saving money by not having kids and living in small, urban spaces where they don’t want to leave their pets for too long, analysts say.
In the April edition of Report on Business Magazine, Canadian novelist and journalist Trevor Cole dug deep into these trends and found out how Pet Valu is monetizing our unconditional fur-baby love.
$3.8-billion
– value of pet products and services in 2024, according to a recent report.
60
– percentage of Canadian households that reported ownership of at least one dog or cat in 2022. That’s 5 per cent higher than the global average.
A reassessment of priorities? The spending could level off as life gets back to normal (whatever that is) but the pandemic has reinforced how new science might be influencing a renewed pursuit of happiness: investing in experiences. So even as prices remain high, consumers might be spending through it as they take stock of their priorities.
I’m allergic to dogs and cats. And yet, we have a dog and a cat. I sound grumpy about it, but between you and me: I enjoy their company. Here’s Murph. Brighten up my inbox with a picture of your pet, please: cwilsonsmith@globeandmail.com.
Charted
Getting by isn’t getting any easier: A variety of services – including plane tickets, rents and cellphone plans – contributed to the upturn of consumer prices. The report marked the first time in 2024 that inflation came in higher than Bay Street estimate.
Rents are still on the rise
Statscan said the national rent index rose 8.9 per cent in May. That’s a “phenomenally” large increase when you consider wage gains are roughly half that level, Rob Carrick notes.
But we’re still keeping our pets well-fed
Canada’s rate of spending on pets is accelerating. From 1994 to 2016, spending increased at an average annual rate of 6 per cent a year, according to Statistics Canada. It has since grown an average of 8 per cent a year and sped up even more during the peak of the COVID-19 pandemic.
On our radar
On the calendar: Earnings today include Blackberry, AGF Management Ltd, General Mills and Micron Technology.
At home: The average down-payment gift for first-time homebuyers has soared into six digits.
On Earth: Electricity made from the heat of the planet is getting a major boost.
On edge: Nvidia’s bumpy ride this week has analysts wondering if it signals a correction for the company or something worse for the stock market.
On stage: Biden and Trump have agreed to rules of conduct in tomorrow’s presidential debate – the first of the 2024 campaign. They’re expected to address their plans for the economy and various legal dramas.
Markets this morning
Global markets were mixed following a U.S. tech rebound, as investors weighed future rate cut possibilities and political uncertainty.
On Wall Street, S&P 500 and Nasdaq futures were in the green ahead of the opening bell, while Dow Jones futures were in the red.
TSX futures edged higher, supported by higher crude prices, and appeared set to regain lost ground after an unexpected rise in domestic inflation diminished hopes of a July rate cut by the Bank of Canada.
The pan-European STOXX 600 was down 0.13 per cent in morning trading. Britain’s FTSE 100 declined 0.028 per cent, while Germany’s DAX gained 0.14 per cent. France’s CAC 40 was down 0.51 per cent.
In Asia, Japan’s Nikkei closed up 1.26 per cent, while Hong Kong’s Hang Seng rose of 0.09 per cent.
The Canadian dollar traded at 73.0 4 U.S. cents.