Holiday potpourri (with added cauliflower)

Just a few brief thoughts before the Christmas break....

* Canada's headline CPI for November was reported yesterday.  The year-over-year rise of 1.2 percent was slightly lower than expected, something which StatsCan attributed to lower food prices.  Ah yes! At this time last year we were enduring the great cauliflower ripoff, with heads of the cruciferous staple selling for as much as ten bucks.  It was all the result of the drought in California, plus the enfeebled state of the Canadian dollar.  This year prices for cauliflower (and other imported produce) have come back down from the stratosphere, resulting in the lower-than-expected headline CPI.

* But of course, the Bank of Canada told us a few months ago that it was no longer going to focus on either headline or core CPI in assessing its inflation target, instead unveiling three oddly-named new indicators.  This month, for the first time, StatsCan has reported the values of those measures.  Two of them -- CPI-common and CPI-trim --are slightly higher than the headline figure.  The third -- CPI-median -- has been at or above the Bank's 2 percent inflation target for the past four months.  Two thoughts here: if the Bank is taking these measures seriously, then the comfortingly low headline CPI measure may not be the best guide to future policy; and, if these measures continue to diverge widely, it will become harder for markets and analysts to assess what the Bank might be about to do next.

* Canada's real GDP unexpectedly fell 0.3 percent in October, abruptly ending the rebound from the impact of the Fort McMurray wildfires.  The weakness was broad-based, but what will concern policymakers most is the sharp decline in the manufacturing sector, with exports of manufactures remaining particularly weak.  If Justin Trudeau is serious about going along with Donald Trump's demand for changes to the NAFTA agreement, Canada will not be negotiating from a position of strength.

* Last but not least, the housing market.  Prices for detached homes in Toronto have risen 27 percent in the last year, prompting the media to declare that the local market is now the "least affordable" in Canada.  That can't really be true, can it?  I mean, if homes were unaffordable, prices would be going down, not rocketing higher.  Evidently there are still plenty of buyers at these prices -- another news story earlier in the week talked of a two-day open house north of the city that attracted 400 viewings and 50 offers.  I understand what the reporters are trying to get at, but I don't think "unaffordable" is the right word.  "Preposterous" or "cruisin' for a bruisin'" might be better.

Best wishes for Christmas and the holiday season to everyone who's been kind enough to read this blog in 2016.  I can't imagine what I'll find to write about in 2017....