Milton residents cautiously optimistic as inflation drops to Bank of Canada’s target

By: Shazia Nazir, Local Journalism Initiative Reporter, The Milton Reporter

The residents of Milton have varied responses and are reacting with relief as Canada’s inflation rate down to two per cent last month, hitting the Bank of Canada’s target after a tough period of price hikes. Here, people have mixed observations of the economy’s future, with the cost of living slightly improving.

Milton’s mother of two, Karishna Patel, was quite cautious while expressing her optimism about the recent inflation figures. “It is a relief for us that inflation is coming down. Prices of groceries have been very high, and while they’re still high, I’m much more optimistic that things might get better as soon as possible,” she said.

Like other people in the community, Patel has been struggling to make ends meet due to the multiplying costs of edibles, and she hopes that the trend of falling prices will continue.

The annual inflation rate dropped from 2.5 per cent in July to the lowest since February 2021. Statistics Canada’s consumer price index report has indicated lower gasoline prices and a decline in clothing and footwear prices for August as key contributors. This is the first August after 1971 that clothing prices have dropped, with retailers offering more discounts to woo shoppers amid lukewarm demand.

Milton residents continue to face affordability challenges despite a decline in inflation, however they also expect us to be ambitious in an effort to build a better community, says Milton Councillor Adil Khalqi.

“As we approach deliberations for the 2025 Milton budget, balancing affordability with the community’s expectations for services will be paramount,” said Khalqi.

Milton’s population is projected to grow to 400,000 within the next 30 years, which Khalqi says makes it essential to invest in services and supports that residents need.

“Building a community we can all be proud of means making sure key investments in municipal services are in place,” he added.

David Martinez appreciated the decrease in clothing prices but expressed concerns about consumers’ spending habits.

The local Milton retailer said, “I am happy to see prices drop, but people are still reluctant to spend money. We offer more discounts, but the demand is much less than earlier.”

Martinez cautiously observes how inflation trends affect his business.

The Bank of Canada’s core measures of inflation, which strip out volatile price movements, also edged down in August. This has caused speculation that a larger interest rate will be cut from the central bank next month.

Some residents, like Tariq Siddiqui, hope that dwindling interest rates will provide some relief.

“I was under pressure with mortgage payments. If they reduce interest rates, it will help manage extra costs,” he said.

Adding to this discussion, Andrew Grantham, CIBC senior economist, stated, “Inflation remains unthreatening and the Bank of Canada should now focus on trying to stimulate the economy and halting the upward climb in the unemployment rate.”

This viewpoint reflects the anticipation that more aggressive rate cuts could help mitigate rising unemployment while controlling inflation.

The Bank of Canada raised its key lending rate to five per cent during its fight against inflation in 2022, but with inflation now under control, the central bank could cut rates further. The bank’s current lending rate stands at 4.25 per cent, and many experts expect a cut at the upcoming meeting on October 23.

However, not all Milton residents are optimistic that the drop in inflation will improve their financial situation. Emily Robertson, who rents a home in the area, pointed out that housing costs are still a major burden.

“Rent is still very high. Even if inflation is down, it doesn’t mean my rent will get down,” she said.

Robertson thinks that while the overall economic picture may improve, the reality for renters and homeowners remains challenging.

As Canadians await the Bank of Canada’s next move, the question remains whether it will be a 25—or 50-basis-point reduction. While inflation has slowed, concerns over the high cost of living remain, particularly in housing, where mortgage and rental costs weigh heavily on Milton residents.

Milton residents are cautiously optimistic about the economy’s improving health, but they know there is still a long way ahead. The next few months will reveal whether this relief is temporary or the start of a more stable economic period, especially for businesses across the region.