Money123: How far can an EV really take you?

Feeling the ‘pinch’ on your holiday grocery bill?

Food inflation is continuing to show signs of easing heading into the new year, but experts who spoke to Global News this week warned that the cumulative impact of years of pain at the grocery store will have many households feeling a “pinch” over the holidays.

While overall inflation held steady at 3.1 per cent in November, food bought from the grocery store saw an annual price hike of 4.7 per cent.

But while the year-over-year comparisons are looking rosier, University of Guelph food economist Mike von Massow tells Global News the month-to-month numbers are a bit more painful.

Fresh vegetables, for example, always cost more heading into holidays because Canada isn’t producing that kind of food during the winter and has to import it from overseas or the United States. The addition of shipping and currency exchange costs means the sides for your holiday dinner might end up more expensive, von Massow warns.

“While they’re not up as much as they were last year or seasonally, they’re still up. So we will feel a pinch at Christmas like we have the last couple of years,” he says.

Read on to find out more about the food inflation forecast for 2024 and how supplies of turkey and ham are holding up heading into your holiday meal prep.

How far can you really go in an electric vehicle?

Canada has mandated that all automobiles sold in the country have zero emissions by 2035, prompting many to imagine their electric vehicle future.

While some might have “range anxiety” — fears that their EV won’t hold a charge long enough to get them from point A to B, with nowhere to recharge in between — experts who spoke to Global News say there’s been remarkable improvement in this arena as of late.

“Range has improved,” said Mark Marmer, the owner and founder of energy consultant Signature Electric. “Now most cars and trucks have at least about a 300- to 350-kilometre range, which is a reasonably comfortable thing.”

But what about cross-country trips? A drive from Toronto to Montreal is about 540 kilometres, meaning that at least one charging stop will be necessary.

Marmer notes that along major connections like Ontario’s Highway 401, there’s been a steady expansion of charging points at gas stations and rest stops, like the province’s highway-side ONroute locations.

Of course, not all EVs are created equal. Read on to find out which electric options on the market will get you the most charge for your buck.

Bank of Canada wary of rate cut impacts on housing

Housing activity has slowed to a crawl in many markets across Canada heading into the new year, but rumblings of interest rate cuts on the horizon could see things heat up come spring.

That’s the concern among some members of the Bank of Canada’s governing council, anyway, according to deliberations for the central bank’s latest rate hold decision released this week.

The bank’s monetary policymakers signalled a concern that pivoting to rate cuts “prematurely” could spur a “rebound” in the housing market, which in turn could further fuel shelter price inflation — a particularly stubborn area for the central bank’s efforts to tamp down price pressures.

A Royal LePage forecast released earlier this month expected a slow start to the year in residential real estate, with activity picking up in the second half of the year thanks to an expected rate cut from the Bank of Canada.

Read more about what economists thought of the Bank of Canada’s deliberations and where interest rate forecasts stand heading into the new year.

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– THE QUESTION –

“I’m trying to prepare my portfolio with interest rate cuts hopefully coming in 2024. I’m interested in technology for that reason, but are there any other sectors you’d recommend looking at? Or ones to avoid? This would be for money with a longer term in mind, like 20-plus years, so I’m alright with a bit more risk.”

— A Money123 reader 

“There is good reason to believe that rates may have peaked and could start to be cut in 2024. There are certain sectors that tend to perform better when rates are on the way down. The first area of consideration isn’t a sector, however, but instead an asset class that a long-term balanced investor should be considering as part of their asset allocation anyway – fixed income. Bonds have an inverse relationship with interest rates, which means that as rates go down the value of the bonds will rise. Longer-term bonds would have more interest rate sensitivity and therefore should perform the best if interest rates are cut. It could be time to revisit your tactical allocation.

When it comes to equities, one sector that tends to outperform after interest rates peak is real estate. So perhaps looking at adding or increasing in this sector, perhaps via a REIT ETF. Another area to consider would be one that was hit by higher rates as logic would tell us they should benefit from a downward swing. The renewable energy sector was hit quite hard with the rising rates as they tend to borrow heavily to fund their projects. Increasing borrowing costs contrasted by revenues that are fixed by long-term contracts saw margins squeeze for companies in this sector. One would think that as their borrowing costs decline, margins would expand and this should be a welcome development by investors.

Remember, interest rate cuts are expected because they look to be having the desired effect – slowing economic growth. With slower economic growth comes the continued threat of recession, which then would arguably provide for a cautious equity market backdrop. Proceed with caution.”

–  Derek Dedman, vice-president, portfolio manager, WDS Investment Management

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Please note: There will be no Money123 next week. Weekly editions of the newsletter will resume on Jan. 6, 2024. Wishing our readers happy holidays and a productive new year!