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Canada’s Inflation Rate Slumps to Lowest in Two Years; Retail Sales Slip

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Canada’s inflation rate slumped to its lowest in more than two years in August, as tepid consumer prices added to the chorus of disappointing economic signs that have dogged the country for months.

Statistics Canada reported that the country’s consumer price index rose 0.1 per cent in August from July, but the year-over-year inflation rate slipped to 1.1 per cent, up from 1.3 per cent the previous month. The closely watched core inflation measure, which excludes the eight most volatile components of CPI (including many food and energy goods), was 1.8 per cent, its lowest reading since July 2014.

Economists had expected overall CPI inflation of 1.4 per cent, and a core reading of 2.0 per cent.

The Canadian dollar fell half a cent against its U.S. counterpart on the news, to about 76.2 cents (U.S.), as the inflation slowdown substantially reduces pressure on the Bank of Canada to consider raising interest rates any time soon.

“It is safe to say there was a complete absence of pricing pressures to worry about in the August inflation numbers. That lines up with the Bank of Canada’s recent shift to sounding a bit more worried about Canada’s economy, and hence the outlook for inflation,” said Toronto-Dominion Bank senior economist Leslie Preston in a research note.

The central bank uses a 2 per cent inflation target as the basis for setting its rate policy, relying particularly on the less volatile core measure to guide its assessment of underlying inflation pressures. Despite an uneven and often disappointing pace in the economy – punctuated by the second quarter’s decline in real gross domestic product of 1.6 per cent annualized – core inflation had been running above the 2 per cent target for the past five months. August’s downturn finally bore the scars of those economic stumbles.

In its most recent interest-rate decision, in early September, the Bank of Canada said inflation risks had “tilted tilted somewhat to the downside since July,” citing the sluggish Canadian and global economies and disappointing Canadian exports.

Much of the weakness in the August inflation numbers came from food, down 0.6 per cent from July, and gasoline, down 0.9 per cent.

The travel component fell 0.8 per cent month over month, as weak domestic economic conditions and the upswing in the Canadian dollar earlier in the year weighed on the tourism business.

The Bank of Canada has long expected Canada’s inflation pace to cool, as the effects of last year’s slump in the Canadian dollar fades from the CPI numbers. Nevertheless, economists noted that inflation in the services sector – which is largely domestically based and therefore little affected by currency movements – cooled to 1.8 per cent in August from 2.1 per cent in July, suggesting the sluggish domestic economy is also weighing on pricing.

Statscan reported Friday that Canada’s retail sales in July were down 0.1 per cent from June, well short of economists’ expectations of a gain of 0.1 per cent in the month. It was the third straight month without a gain, as May and June sales were flat. The decline was mainly due to lower gasoline prices, but the weakness was nevertheless fairly broad-based, with declines in five of 11 sectors.

On a volume basis, excluding the effects of price changes, retail sales rose 0.3 per cent in the month – an encouraging sign of firm demand. Nevertheless, the tepid retail numbers are another indication of an economy that isn’t firing on all cylinders.

“The overall message is one of a slow-motion machine for both Canadian growth and inflation,” said Bank of Montreal chief economist Douglas Porter.

He said the inflation downturn “is far from enough” to prompt the Bank of Canada to consider an interest-rate cut, but suggested that the pull-back in the core rate to below the central bank’s 2-per-cent target gives it a little bit of breathing room.

“The sag in core inflation does remove one potential obstacle if another nasty shock erupts and the BoC needs to respond.”

Is the CEO and Founder of Investors King Limited. He is a seasoned foreign exchange research analyst and a published author on Yahoo Finance, Business Insider, Nasdaq, Entrepreneur.com, Investorplace, and other prominent platforms. With over two decades of experience in global financial markets, Olukoya is well-recognized in the industry.

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Crude Oil

Brent Rises to $73 Per Barrel as Oil Producer Iran Plans Another Attack on Israel

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The international crude benchmark, Brent Crude, rose to $73 per barrel as it rose 29 cents or 0.4 percent to settle at $73.10 a barrel on Friday on expectations that Iran will attack Israel from Iraq in the coming days.

The US West Texas Intermediate (WTI) crude gained 23 cents, or 0.3 percent to settle at $69.49.

The market has seized on the news from Thursday that Iran is preparing to attack Israel from Iraq within days.

However, market analysts point out that the impact on oil prices may be muted as the attacks signify a show of strength rather than action. This is why there wasn’t a much price boost.

Iran’s backed groups are currently fighting Israel, including Hezbollah in Lebanon, Hamas in Gaza and the Houthis in Yemen. So, this has seen the two countries engaged in a series of retaliatory strikes within the broader Middle East warfare set off by fighting in Gaza.

In a related development, the US asked Lebanon to declare a unilateral ceasefire with Israel to revive stalled talks to end hostilities between Israel and Hezbollah.

Another factor supporting prices is the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+ which could delay plans to increase supply in December.

The group has always maintained that its planning production cuts rollback would depend on market conditions.

The US, the world’s largest oil producer has been seeing an increase in its production with Exxon Mobil saying its global output hit an all-time high while Chevron also said its US production hit a record high.

This aligns with projections that annual output was on track to hit a record 13.2 million barrels per day in 2024 and 13.5 million barrels per day in 2025.

Last month, OPEC’s production increased by 370,000 barrels per day in October after Libya’s political resolution and its resultant 500,000 barrel-per-day output boost.

Libya’s output recovery led OPEC to raise its production to nearly 30 million barrels daily, even as Iraq, Iran, and Saudi Arabia lowered their output.

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IPMAN Pushes Back on Dangote’s Call to End Petrol Imports, Cites High Costs at Refinery

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The Independent Petroleum Marketers Association of Nigeria (IPMAN) has addressed concerns about its members purchasing petrol outside the country.

Investors King reported that Aliko Dangote, the owner of Dangote Refinery, urged Nigerian oil marketers to stop importing petrol and instead lift supplies from his refinery.

Dangote mentioned that the refinery currently has over 500 million liters of petrol in storage and that marketers’ reluctance to lift his product is causing financial losses.

In an interview on Friday, IPMAN’s National Assistant Secretary, Yakubu Suleiman, stated that the association cannot compel its members to buy petrol from the Dangote Refinery due to the deregulated nature of the market.

According to Suleiman, IPMAN members cannot patronize Dangote if his petrol is more expensive than other suppliers. He explained that, for profitability, marketers must seek the most affordable fuel sources.

Suleiman also accused Dangote of trying to monopolize the oil market, noting, “Prices are determined by international pricing. Dangote should ideally be communicating daily about his pricing. But he can’t enforce that we buy only from his depot without stakeholder engagement.”

Suleiman added, “IPMAN cannot simply instruct our members to purchase solely from Dangote Refinery. We operate in a deregulated system. Marketers will source products where prices are cheaper and advise members accordingly.”

He explained, “If Dangote sells at N1000 per liter, and there are other sources selling at N900, we can’t direct marketers to choose Dangote simply because it’s his product. We prioritize lower prices and profit.”

Suleiman also noted that last week, Dangote’s price was higher than other sources, explaining, “For example, last week he offered N995 per liter, with additional costs to transport the product to depots. Independent marketers can’t sell at a profit under these conditions, so we must consider Nigerians’ interests.”

This comes after IPMAN President Abubakar Garima countered Dangote’s allegation that marketers were boycotting his refinery.

He pointed out that marketers cannot load petrol from Dangote’s refinery in Lagos despite having paid ₦40 billion to the Nigerian National Petroleum Company Limited (NNPCL).

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Crude Oil

Rivers State Governor Refutes Claims of NNPCL Shutdown, Labels Report as ‘Propaganda’

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The Governor of Rivers State, Siminalayi Fubara has denied shutting down the Nigerian National Petroleum Company Limited (NNPCL), and other oil companies in the state as retaliation to a Federal High Court’s ruling barring the release of allocations to the state as widely reported.

Shortly after the court’s ruling, a report claiming that Fubara had ordered the immediate closure of NNPC and other oil companies in the oil rich state emerged on social media.

The report alleged that the Rivers State Governor declared that if the government fails to reverse the court ruling, there will be no oil for the country from Rivers.

Reacting to the allegation via a statement signed by the Commissioner for Information and Communications, Warisenibo Joe Johnson, the Rivers government said the report is not only false but a concocted propaganda from the enemies of the state.

The government urged Rivers people to ignore the report, adding that Fubara is committed to the rule of law and does not rely on unconventional and crude approaches to respond to matters of governance.

The statement reads, “The attention of Rivers State Government has been drawn to a spurious news item circulating on social media on “Gov. Siminalayi Fubara shutting down NNPCL and all oil companies in Rivers State”.

“The report was not only false, but a concocted propaganda from the imagination of the author and enemies of the State. The story was also circulated by an inconsequential and unverified medium

“Governor Siminalayi Fubara is committed to the rule of law and does not rely on unconventional and crude approaches to respond to matters of governance.

“We therefore enjoin Rivers people and well-meaning Nigerians to discountenance the spurious and fake report as Governor Fubara at no time contemplated and/or directed such needless order of shutting down the economy for any reason.”

Investors King reported that a Federal High Court in Abuja on Wednesday, restrained the Central Bank of Nigeria (CBN) from releasing monthly allocations to the Rivers State Government.

The judge, Joyce Abdulmalik, in a judgement, held that the receipt and disbursement of monthly allocations since January 2024 by Governor Siminalayi Fubara of Rivers State is a constitutional somersault and aberration that must not be allowed to continue.

Abdulmalik submitted that the presentation of the 2024 budget by Fubara before a four-member Rivers State House of Assembly was an affront to the constitutional provision.

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