‘Time will tell’: What impact will inflation rate have on Moncton businesses, real estate market?

A photo of Dolma Foods Owner Hossein Barar. (Derek Haggett/ CTV Atlantic)

Finally - some good news for consumers and business owners across the country.

Statistics Canada announced Tuesday the inflation rate fell lower than expected in January due mainly to a drop in gas prices.

The annual inflation rate dropped to 2.9 per cent in January, down from 3.4 per cent in December.

However, grocery prices were up 3.4 per cent.

Chamber of Commerce for Greater Moncton CEO John Wishart said Tuesday’s news means prices should at least moderate and perhaps go down a bit.

“They're talking about gasoline and they're also talking for the first time in quite a while about food costs which have been high now for a couple of years,” said Wishart.

Wishart spoke inside Dolma Foods about what the drop in inflation means to small businesses in Greater Moncton.

“A store like this could potentially see some savings in the supplies that they get in and stock,” he said.

Wishart said anybody who has front facing customer service like a store, a restaurant or a cafe should be able to see lower food costs.

“Or at least food costs moderating a bit,” said Wishart. “Under three per cent is kind of a magic number and I think the Bank of Canada wants to see between two and three per cent long-term. So maybe for small businesses this is the start of a trend that will eventually see lower interest rates.”

Dolma Foods Owner Hossein Barar said his margins have shrunk because of high inflation and he’s had to explain to his customers why prices have gone up.

“We had to educate our customers. Our customers, they see we are not gouging them,” said Hossein.

He’s pleased to see the rate drop, because running his store when the cost of living is high has been tough.

“Labour up, electricity up, taxes up, everything is up. It's just not easy time for small businesses,” said Hossein. “It's going in the right direction, put it that way. How fast? Time will tell.”

It's expected the easing of inflation will have an impact on interest rates as well.

The Bank of Canada has been holding its key rate at five per cent and has shown signals its next move will likely be a rate cut.

“I think it is worth pointing out that while food and gas have seen some declines, we're still seeing substantial pressure on shelter costs,” said David MacDonald, a senior economist with the Canadian Centre for Policy Alternatives.

Moncton realtor Natalie Davison said the real estate market has been a seller’s one so far in 2024, and Tuesday’s announcement is more positive news.

“Seeing a reduction in inflation usually is followed by an increase in consumer confidence. Increase in buying power and you see buyers get out there in greater measure,” said Davison.

Davison believes if interest rates go down, the amount of people moving to Moncton will go up.

“We have done quite well as opposed to the rest of Canada through all of this. However, when we see interest rates start to go down and people be able to move their properties in markets like Ontario and out west again, I think you're going to see more folks come east again,” said Davison.

The next inflation announcement will be on March 6.

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