• University of Guelph

• MGMT 2150

 Business News Analysis Article One Canada's inflation rate turned negative in April for first time since 2009 https://www.cbc.ca/news/business/inflation-rate-april-covid-1.5576581 Summary In this article, written by Pete Evans expands on some of the economic impacts stemming from the COVID-19 pandemic. He outlines some of the effects caused by the first negative inflation rate in over a decade, including consumer demand and pricing with respect to carious market categories. He correlates how the demand trend, in accordance with the inflation rate, caused pricing fluctuation in gas, travel, clothing etc. He ends with a discussion on how these changes will fair long-term. Concepts Profit (1-a), Inflation (2-6), Consumer Price Index (CPI) (2-3a) Market economy (2-3a), Longterm forecast (11-2a), Demand (2. 5a) Personal Reflection Inflation arises when the average of all prices of goods and services increases (Althouse et al., 2017). As stated in the article, with this is the first negative inflation rate, or deflation, in Canada since 2009 (Evans, 2020). Demand in the economy contributes to this inflation shift. Demand is the consumers willingness to buy an amount of good/service at varying prices (Althouse et al., 2017). Due to the pandemic, there is a spiking demand for food and various household supplies which causes a price jump in those goods. This is evident in the reading, as Evans notes the push in demand for toilet paper, led to a 6 percent price rise, the largest on record (Evans, 2020). Conversely, many relatively low demands goods, such as gas, experienced a price drop. This variation in pricing contributes to a change in consumer price index. Consumer price index is the index of the prices of a goods and services bought by consumers. (Althouse et al., 2017). Canada’s consumer price index dropped to negative reading as the price of most items fell in comparison to the price of the same items last year. Fluctuating demand is also influenced by the pressure on those categories to remain competitive. Market economy is an economic system built on competition in the market (Althouse et al., 2017). The article provides data that shows various sectors, such as hotels and clothing retailers, followed suit as many cut pricings in order to compete in a tighter market (Evans, 2020). Cutting prices results in reduced profit, where profit is the financial earnings after expenses (Althouse et al., 2017). As such, lower prices could negatively impact the economy long-term, as less company profit results in reduced finances for the job market. With these considerations, companies will have to plan and observe their long-term forecasts, prognoses of a company’s activities and subsidy over a period (Althouse et al., 2017), to organise a business strategy to maximize profit in the aftermath of the pandemic. With new research anticipating a second wave, it safe to assume all possibilities would be considered. That said, the article concludes that the current inflation is expected to rise to zero with the rise in prices, as the country opens back up (Evans, 2020)