Take your time.
Evidence of meeting #4 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was dollar.
Evidence of meeting #4 for Industry, Science and Technology in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was dollar.
12:05 p.m.
Governor, Bank of Canada
I would like to correct you on the connection between our benchmark, the core CPI, and the eight excluded products. The core CPI is simply a guide that tells us what the inflation trend will be, because the total CPI fluctuates according to fluctuations in those eight products and services. The core CPI is useful as an indicator of what the future holds but our benchmark is the total CPI, not the core CPI.
Your second question is very complex and I hand it over to my colleague.
12:05 p.m.
Senior Deputy Governor, Bank of Canada
I'll speak briefly to two points. There are clearly problems but the increase of energy prices is calculated in American dollars. The increase in Canadian dollars is therefore not as high because of the appreciation of the Canadian dollar. That's a rather significant point.
Second, in terms of the ability of the manufacturing sector to react, as I mentioned, it's important to react by investing in machinery and equipment, in order to increase productivity and flexibility.
12:05 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
If businesses are not making a profit, how can they increase productivity and buy new equipment?
12:05 p.m.
Governor, Bank of Canada
It is true that profits are not very high for some sub-sectors. The situation is a very difficult one, especially in the clothing, textile, furniture and pulp and paper sectors. There are enormous variations in the manufacturing sector. There are businesses that are making enough of a profit, not a huge profit, but enough to invest. Others are having problems.
12:05 p.m.
Bloc
Robert Vincent Bloc Shefford, QC
There must be a connection with the increase in oil prices. Your table indicates that since July 12, 2005, there were seven increases of . 25 of a point, in the months of September, October, December, 2005 and January, March, April, and May, 2006. There must be a connection between these increases and costs.
12:05 p.m.
Governor, Bank of Canada
That is a problem for businesses everywhere. It's difficult for manufacturing sectors because energy constitutes a major part of their costs, but the situation is the same around the world.
12:10 p.m.
Bloc
12:10 p.m.
Conservative
The Chair Conservative James Rajotte
At this point I'd like to thank the witnesses, Mr. Dodge and Mr. Jenkins, for being with us today. Their information was very insightful. We appreciate that very much.
We are going to formally adjourn the meeting, officially end this meeting, and then we will reconvene for the next witness, Mr. Orr.
Mr. Jenkins and Mr. Dodge, thank you very much for being with us today.