Oil falls again, food prices rise & Canada's debt bubble: BUSINESS WEEK WRAP
Oil's decline dominated headlines again this week. But despite all the bleak media reports, cheaper oil isn't completely bad news for Canada. Sure, it's not great for oil companies and governments who rely on oil revenues. But drivers, flyers and even investors — as long as they're not in the energy sector — could see their fortunes improve if crude prices stay this low for much longer.
It's a complicated issue, so we decided to take a crack at looking at who some of the winners and losers of cheap oil are in one of our most-read stories this week.
Groceries getting pricier
Pump prices may be going down, but if there's one part of everyday spending that certainly isn't, it's your grocery bill. And that's not likely to change any time soon, if one of Canada's biggest agricultural schools is right. We reported this week that the University of Guelph expects prices for things like meat and vegetables are going to go up by more than twice the overall inflation rate.
You could be paying up to five per cent more for food basics next year, the school expects. After a year in which the price bacon went up by as much as 25 per cent, predictions of price hikes to come weren't exactly welcome news this week.
Debt bomb about to blow
All that extra spending may be a cause for another one of our most popular stories this week, a report from a credit monitoring agency that says Canadians' debt loads have never been higher.
The average Canadian now owes almost $21,000 — and that doesn't even include the mortgage, Equifax says. For now, we seem to be staying on top of those debts, as the delinquency rate remains microscopically low. But that's easier to do in a low rate environment like this one. It wouldn't take much in terms of rate hikes to make payments on all that debt a lot tougher to swallow.
The worst news? "Following a frenzied start to the festive shopping season with more to come in the countdown to Christmas, we can expect the consumer debt to rise even further," Equifax's Regina Malina told us this week.
The end of Ontario's auto industry?
Canadians' credit card balances aren't the only things trending in the wrong direction lately. We reported this week on an interesting report from the Canadian Automotive Partnership Council that showed investment in Ontario's car industry is approaching all-time lows.
Car companies used to invest about $3 billion a year in plants and equipment in the province. But today, that figure is down to about $1.5 billion and in danger of disappearing completely.
General Motors is retrenching more than anyone else, it seems, to the point that unless something changes, the company may soon have no presence in the province. That's an unthinkable concept for a company town like Oshawa, but very much a possibility, the report said.
"Unfortunately it is a high cost area to build," auto analyst Joe McCabe says. "And there's excess capacity at other GM facilities that can build those same vehicles that Canada currently builds, the financials point to moving that production south."
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