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Where’s the grocery competition?
A long-awaited report from the Competition Bureau probing concentration in Canada’s grocery sector was released this week, with some recommendations for how to improve affordability for Canadians amid a persistent bout of food inflation.
One of the top suggestions was to attract more discount brands to Canada, such as European grocers Aldi or Lidl.
Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University, told Global News that there is indeed a correlation to bringing in cheaper grocers to compete with established players in an effort to bring down food prices. He cites the introduction of Walmart to the Canadian market in recent decades as proof of the benefit for consumers.
“When a new store opens, prices tend to drop — including food prices. That’s why I think everyone wants the ‘Aldi effect’ to come into the market to see this new wave of deflation with food prices,” he says.
But experts who spoke to Global News, as well as the Competition Bureau itself, say the bid to lure new discount competitors to Canada’s market will face substantial roadblocks.
Read more.
Inflation continues on a downward trend
Canadians got some good news this week about ongoing price pressures in some — but not all — line items on the household budget.
The annual inflation rate dropped to 3.4 per cent in May, a full percentage point lower than the previous month.
Lower gas prices compared to last year’s pain at the pumps were the biggest factor in the cool down, but consumers were also paying less for cellular plans, furniture and automobiles, according to Statistics Canada.
It wasn’t all rosy, unfortunately: grocery prices continued to rise to the tune of 9.0 per cent year-over-year, and StatCan notched another new record increase in the mortgage cost index amid higher interest rates.
The overall slowdown in inflation will factor into the Bank of Canada’s decision-making as it prepares for its next interest rate decision on July 12, however.
Here’s what to know.
Bed, Bath & Beyond back?
Bed, Bath & Beyond’s exit from the Canadian market is proving short-lived.
The retailer, which filed for bankruptcy in April and liquidated its stores over the past few months, is set to return to Canada in an online-only format.
Overstock, a U.S. online furniture retailer, acquired the intellectual property and some digital assets of the brand and the relaunch will be available for Canadians within the week, the company announced in a press release.
The brick-and-mortar operations of Bed, Bath & Beyond Inc. are not included in the deal, meaning the physical stores won’t be reopening even as the online brand comes back to life.
“I’m excited for consumers to experience the new Bed Bath and an even bigger and better Beyond,” said Overstock’s CEO Jonathan Johnson in the announcement.
Find out more here.
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– THE QUESTION –
“I’d like to know if using RRSP contributions towards a down payment for a mortgage is recommended in order to make a larger down payment or if it’s better to just keep saving? I’d like to be in a home within five years, but don’t know if the best use of my RRSP money is to let it grow over that time and buy a house that will probably cost more or take it out early and try to get in sooner?”
— A Money123 reader
“The RRSP Homer Buyers’ Plan lets any first-time homebuyer withdraw up to $35,000 (without an inclusion into taxable income) from their RRSP to purchase a home. However, you have 15 years to pay back anything you withdraw, which can add to your long list of monthly expenses as a new homeowner.
Before you dip into your RRSP, try to take advantage of the new First Home Savings Account (FHSA). The FHSA, like the RRSP, allows you to deduct any contributions from your taxable income, and anything in the FHSA can grow tax-free. But, you won’t need to pay back whatever you withdraw, and withdrawals aren’t included in your taxable income. There are even mechanisms that let you transfer RRSP funds into an FHSA.
I think from there, someone who is young and far from retirement would be in a better position to use the RRSP Home Buyers’ Plan than someone closer to retirement. Saving for retirement is not as quite important for someone in their late 20s versus someone in their late 40s.
Additionally, the Home Buyers’ Plan isn’t a ‘do’ or ‘don’t do’ decision. You can always withdraw part of the $35,000 to purchase your first home. Some people may only withdraw $5,000 even if they can take the full $35,000.
Lastly, speaking to a fee-only financial planner can help. Whether to use the Home Buyers’ Plan is very bespoke to your own goals and plans — When do you want to retire? How much do you want to spend on a home? What are your other financial goals? A planner can consider your needs and resources and determine how the Home Buyers’ Plan fits.”
– Adrian Zee, personal finance writer
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