A surprisingly low inflation rate, airline negotiation tips, and the decreasing cost of clothing: Business and investing stories for Oct. 20

Getting caught up on a week that got away? Here’s your weekly digest of the Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.

Canada’s inflation rate falls to 1.6% in September, raising odds of larger BoC rate cut

Canada’s annual inflation rate slowed more than expected to 1.6 per cent in September. It’s the first time in more than three years – since February, 2021 – that the inflation rate dropped below 2 per cent. The soft results on Tuesday were heavily influenced by gasoline prices, which fell 7.1 per cent in September. The bank’s next decision on Oct. 23 has been hotly debated for weeks, Matt Lundy reports. Economists and investors were roughly split over whether the BoC would stick with quarter-percentage-point cuts or opt for a larger half-point reduction. After the inflation report, money markets were pricing in a 75-per-cent chance that the BoC will lower its benchmark interest rate by 50 basis points next week.

Canada’s dairy farms dump 7 per cent of all milk produced, study contends

A reputable study has found that Canada‘s dairy industry discarded approximately 7 per cent of all milk it produced over a 10-year period, according to a new estimate, as part of a supply management system that is designed to control output and keep prices stable. According to the Canadian Dairy Commission‘s website, “costly surpluses can be avoided by controlling production effectively,” adding that when milk cannot be processed due to unforeseen circumstances, producers will often send it to other provinces, donate it to food banks or feed it to calves. A spokesperson for Dairy Farmers of Canada said milk is disposed only as a last resort after exploring all other alternatives, but the study’s author concluded that vast quantities of milk are wasted annually owing to inefficiencies in the system.

Clothing prices are getting slashed – part of a long-term trend of discounting

Clothing and footwear prices have dropped 4.4 per cent over the previous year, part of a decades-old trend of discounting. Since the turn of the century, nominal prices for clothing and footwear have dropped 7.4 per cent, according to Statistics Canada’s calculations. The trend is wildly different for general consumer prices, which have jumped 72 per cent over the same time period. In this week’s Decoder, Matt Lundy looks at why these numbers are so vastly different.

How Canada’s venture capital leader turned into an industry laggard

For venture capital firm Georgian Partners Growth LP, the startup WorkFusion Inc. was supposed to be a big winner. It had a “powerful vision” to improve productivity with robotic process automation (RPA) software. So, Georgian bought in heavily, owning 52 per cent of the company. But the company‘s revenue sank in three of the past four years, losses mounted and cash dwindled as the RPA business declined. WorkFusion isn’t Georgian’s only disappointment, nor its worst performer. During the first half of 2024, Georgian wrote down 28 investments in 21 companies – wiping out US$430-million in book value – across its five oldest active funds. Even though Georgian made the most of an early win on Shopify, it now needs several portfolio companies across several funds to spring back. Most of its underperforming funds still have time: They have 10-year lives with potential to extend for two more. Georgian’s fortunes and fund performance could improve, if software companies’ prospects become better, Sean Silcoff reports.

Interest rates have further to fall, but fixed mortgage rates are already nearing their bottom

The Bank of Canada is expected to cut the prime interest rate by an additional 2 or 2.5 percentage points in the coming year, but fixed rates for five-year and three-year mortgages will likely drop by much smaller amounts. That’s because banks and mortgage providers often set their long-term mortgage rates based on the performance of bond markets. In general, weaker bond yields tend to align with lower rates, and vice versa. BMO senior economist Robert Kavcic says bond markets dropped considerably over the summer as they priced in universally expected rate cuts from the U.S and Canadian central banks throughout 2024 and early 2025. But in the last couple weeks, the bond market saw a small rebound as the U.S. economy showed unexpected strength, and there’s some debate as to what it all means going forward.

Flight delayed or cancelled? You might want to ask about a business class rebooking

An Edmonton resident’s recent interaction with Air Canada over a cancelled flight could prove to be a lesson in airline negotiation for flyers. When Zachary Penner’s flight to Toronto was cancelled just half an hour before it was supposed to take off in mid-July, Air Canada automatically sent him a new ticket in economy class, the same fare he had purchased, for a flight leaving a day later. But a quick web search revealed that a business-class seat remained up for grabs on a similar flight departing just six hours after the cancelled one. While Air Canada initially refused to upgrade Mr. Penner to the pricier spot, it eventually re-accommodated him on the earlier flight, saying an economy seat had suddenly become available, he said. The case highlights how checking for and inquiring about rebooking in a higher class of service can help stranded passengers secure better flight alternatives than the ones airlines might otherwise offer by default, Erica Alini writes.

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