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(March 20, 2007) Inflation rose substantially in February, StatsCan reports. Consumers paid 2.0% more in February for the goods and services included in the Consumer Price Index basket than they did in February 2006.

The increase in all-items CPI from an annualized rate of 1.2% in January to 2.0% in February was the sharpest since September 2005. While the fallout from Hurricane Katrina was the culprit for the 0.8 percentage point rise in September 2005, last month’s increase was strongly driven by higher gasoline prices in some regions of the country, StatsCan said.

Gasoline shortages, resulting from the fire at the Ontario refinery, contributed to the 3.8% national average price increase at the pump between January and February this year. Pump prices climbed a substantial 9.8% in Ontario, while drivers in Quebec paid 1.7% more.

Increases in the costs of fresh vegetables and travel, along with continued high real-estate prices also contributed to the rise in inflation, although StatsCan points out that the effect of these were dampened by slumping natural gas prices.

Prices were up in all 10 provinces on average, but in only three provinces did prices rise faster than the national average between February 2006 and February 2007: Alberta at 4.9%, British Columbia at 2.2% and Manitoba at 2.1%. StatsCan said that averages for these provinces have been higher than the national all-items CPI since September 2006.

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IFB reduces rates on E&O program

(March 20, 2007) The Independent Financial Brokers of Canada announced Tuesday a mid-term reduction in premiums for its professional liability program that will see rates for some plan members drop by as much as $500.

The IFB said rates for the majority of its Errors and Omissions plan members were reduced in July 2006, when the IFB program was renewed. The IFB said the new rate reductions are part of an overall revamping of its E&O program. The newly introduced rate structure substantially reduces premiums across the plan for those seeking higher limits of $2 million, as well as introducing lowered rates for mutual fund sales representatives.

By introducing a new simplified rate structure, IFB said, its plan applicants will fall into one of two main categories: life insurance brokers with less than 50% of revenues derived from the sale of mutual funds or brokers with a mixed book of business in which over 50% of earnings come from the sale of mutual funds. The plan also offers a third category: assistants of mutual fund brokers who hold a mutual fund licence but are in a non-selling position.

The new rate structure and premiums will be available on a pro-rated basis as of April 1 for new plan applicants, with similar savings for current plan members when the plan renews later this year.

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BMO backs budget’s charitable donation changes

(March 20, 2007) BMO has issued a release that applauds the federal government’s decision to remove the capital gains tax on listed stocks donated to private foundations.

Marvi Ricker, vice-president and managing director of philanthropic services for BMO Harris Private Banking, believes the changes will generate substantial donations to private charities and foundations.

Ricker said that each time the government has made changes that are meant to stimulate charitable donations, they are always met in kind by investors.

In 1997 the capital gains inclusion rate for appreciated marketable securities was cut in half, and the corresponding donation claim was also increased. And then in May 2006, the budget eliminated capital gains tax on donations of securities to charities.

“The elimination, last May, of the capital gains tax on donations of publicly traded equities to public foundations and charities has led to increases in substantial donations, notably to universities and hospitals, which are certainly beneficial to Canadians,” Ricker said.

“Consequently, more and more individuals are being called upon to contribute to the charities that they care about, and they are increasingly able to do so as the wealth in Canada has increased significantly.”

“However, there is real donor fatigue out there in the sense that people are overwhelmed by the smaller $50 and $100 requests. Many Canadians would rather give a significant amount and know that their money is going to be used in a way that is meaningful and will have an impact,” she said.

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Institutional investor confidence bolstered by market drop

(March 20, 2007) Global Investor Confidence increased sharply to 100.6 from February’s revised reading of 90.6. Much of this 10.0 point growth was driven by the confidence of North American institutional investors, which rose strongly, from 101.9 to 115.1.

“The strong increase in the confidence of global institutional investors can be traced back to the market turmoil that began towards the end of last month,” said Harvard professor Ken Froot, the index’s co-creator. “Once the initial volatility abated, institutional investors stepped in and allocated towards equities in the second week of March to take advantage of better valuations that were presented. While some participants in the marketplace wanted to divest themselves of equities over recent weeks, institutional investors have been ready and willing to take the other side.”

Excitement over potential bargain investments was not shared globally. Investor confidence in Europe dropped 5.1 points to 87.4, while the confidence of Asian investors increased only slightly from a revised reading of 82.5 to 82.8.

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(03/20/07)