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OTTAWA–Ontario, Alberta and Saskatchewan led the country in falling consumer prices as Canada's annual inflation rate fell to its lowest level in almost 15 years, dropping to 0.4 per cent in April.

Toronto's inflation rate plummeted to 0.8 per cent, down from 2.1 per cent in March.

Statistics Canada said prices overall fell in April by 0.1 per cent on a month-to-month basis – 0.3 per cent on a seasonally adjusted basis – pushing the inflation rate lower.

This is the lowest rate on inflation since December 1994 and represents a sharp drop from the 1.2 per cent rate recorded in March.

The steep drop was slightly more than economists predicted, but likely had little impact on the Canadian dollar, which moved up one cent to above 87 cents US on Wednesday morning on the strength of oil prices.

"It appears all but certain that Canadian headline inflation will dip into negative terrain on a year-over-year basis in the next report, matching what we have seen recently in the U.S., Japan and China," said Douglas Porter, deputy chief economist with BMO Capital Markets.

Even though gasoline prices have rebounded recently, which would tend to elevate inflation, last year's wild acceleration will more than overshadow any uptick this spring and summer.

As it is, four provinces are already in negative territory – Prince Edward Island, Nova Scotia, New Brunswick and Alberta.

But few economists expect the trend to lead to deflation, defined as a prolonged and widespread consumer price contraction.

Economists with the Bank of Nova Scotia said the letup in prices are in line with Bank of Canada projections, which calls for inflation to dip below zero this quarter and in the third quarter before rising moderately again.

"Inflation is currently not an issue in Canada, but neither is deflation," agreed Krishen Rangasamy of CIBC World Markets.

Deflation is feared because it can lead to a vicious cycle of consumers and businesses delaying purchases and investment in expectations of savings down the road, further exacerbating the weaknesses in the economy, depressing prices even more high quality business cards.

While consumer prices are moderating, it is almost exclusively a one trick pony – energy.

The price for oil and other fuels declined 33.5 per cent in April from last year, while the price for gasoline dropped 24.7 per cent, largely a reflection of last spring's buildup in crude oil prices.

The decrease pushed prices down on a number of other components, including transportation, which fell by eight per cent, and shelter costs, which were mitigated by the 17.5 per cent decline in natural gas.

The cost of purchasing or leasing a passenger vehicle also dropped, by 8.3 per cent from a year ago.

If energy costs were not included, Canada's inflation rate would stand at 2.4 per cent, near the Bank of Canada's desired target. In fact, core inflation, which the central bank looks at for underlying trends, remains close to the target two-per-cent range, at 1.8 per cent.

Of the eight major components used by Statistics Canada to measure inflation, seven remained on the positive side in April, with food the main driver of higher prices.

The agency said food prices rose 7.1 per cent in April, a slightly lower rate than the 7.9 per cent recorded in March.

But there were some outsized gains, including a 26-per-cent increase in fresh vegetables, a 16.8-per-cent hike in fresh fruit, and a nine-per-cent rise in both beef and chicken. Potatoes spiked 43.3 per cent higher as a result of recent poor harvests that have reduced supply.

Other inflation drivers were mortgage interest costs, which rose 3.2 per cent, although that was lower than the 4.2 rise posted the previous month.

Regionally, the agency said consumer prices slowed in all provinces in April, with the largest slowdowns coming in Alberta, Ontario and Saskatchewan.

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Ottawa is flexible about when General Motors Canada and its union reach a new labour agreement, as long as it's part of a finished restructuring plan to be delivered by the end of May, Industry Minister Tony Clement says.

The federal and Ontario governments set last Friday as the deadline for GM to reach a new labour agreement with the Canadian Auto Workers, but the two sides were still mired in negotiations Tuesday.

"We need a resolution one way or the other by May 31," Clement told reporters Tuesday in Atlanta, where he was attending a biotechnology conference.

"GM is a very complex situation involving a multitude of countries and we are trying to exhibit as much patience as possible from Canada's perspective, though there are certain things that have to happen in order for there to be a deal."

However, the CAW said in a pamphlet sent to members that the federal and provincial governments are interfering in the talks, making an agreement difficult.

"Their lack of experience in labour relations, and their repeated threats to pull the plug entirely on GM Canada, have made this process all the more difficult," the pamphlet says.

The union said the major sticking point is pension benefits. GM had a pension deficit of about $4.9 billion as of November 2007, but reports say it ballooned to $7 billion after financial markets crashed last year paydayloans.com.

"We have moved mountains in trying to reduce the cost of pensions, without tampering with the level of benefits our retirees receive," the union said.

"We will not be blackmailed by governments and employers who see this as an opportunity to take away, from all workers (not just CAW members), the principle that a worker deserves a fair and secure pension."

CAW members ratified a deal with GM in March, less than a year after settling a three-year contract, but the two levels of government almost immediately said it didn't do enough to cut costs.

Without a more stringent deal, the governments have said they won't give GM Canada the $6 billion in financial assistance it has requested, meaning in a worst-case scenario the company's Canadian assets could be liquidated.

GM has until the end of May to provide governments in Canada and the United States with a restructuring plan that could include filing for bankruptcy protection.

Clement will be in Washington, D.C., on Wednesday to discuss the progress of the talks with U.S. officials.

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U.S. prosecutors have broadened their criminal investigation of the Bernard Madoff case beyond the friends and family of the confessed swindler to at least eight investors and associates, The Wall Street Journal reported on Monday, citing people familiar with the matter.

The paper named three investors under investigation by the U.S. Attorney’s Office, including Jeffry Picower and Stanley Chais, two philanthropists who are the target of lawsuits brought by the trustee liquidating the Madoff firm.

Carl Shapiro, a women’s clothing entrepreneur and close friend of Madoff, is also under criminal investigation, the article said.

Investigators have gathered evidence of Picower and Chais telling Madoff how much in returns they wanted and that their accounts would reflect the amounts, the paper said. It said investigators were also reviewing evidence suggesting Shapiro knew his returns were fraudulent.

The paper said prosecutors have not charged any Madoff investors with criminal wrongdoing.

The Journal quotes a lawyer for Chais, 82, and a representative of Shapiro, 96, as saying the men had no knowledge of the fraud no fax pay day loan. A lawyer for Picower, 67, told the paper his client was not complicit in the scheme and had suffered billions in losses.

Madoff, 71, has pleaded guilty to 11 criminal charges including securities fraud, money laundering and perjury for a scheme in which he used money deposited from new clients to finance the withdrawals of earlier customers.

The scheme fell apart as a wave of clients sought to withdraw their money in 2008 amid the financial crisis.

Five months after Madoff’s massive fraud was revealed, little of his victims’ money has been found, and it appears increasingly likely that the worldwide hunt for their missing billions will drag on for years.

Reuters was unable to contact the U.S. Attorney’s office for the Eastern District of New York outside regular business hours.

(Reporting by Anurag Kotoky in Bangalore; Editing by Lisa Von Ahn)

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More evidence emerged Friday that the recession is easing, with output by the nation’s factories, mines and utilities falling at the slowest pace in six months.

At least one area of the economy is flat, but that’s welcome news. Consumer prices were level in April after a slight dip the prior month.

Inflation usually doesn’t pick up until well after a recovery begins, noted Mark Vitner, senior economist at Wachovia. If the economy rebounds late this year, as many analysts expect, prices likely will be stable until 2011, he said.

Some economists have been concerned about the possibility of deflation. But most say that possibility appears remote because the Federal Reserve has responded with force to combat the downturn.

The Fed said output at factories, mines and utilities fell 0.5 percent last month, after revised declines of 1.7 percent in March and 1 percent in February. Analysts had expected a drop of 0.6 percent last month.

Still, the report showed U.S. industry remains weak. Industrial production has fallen in 15 of the 17 months since the recession began in December 2007 and is down 16 percent since then.

"Overall, yet another report that fits within the picture of an economy contracting more slowly but still far from an actual recovery," Paul Ashworth, senior U.S. economist at Capital Economics, wrote Friday.

A 1.4 percent increase in auto production, which came after huge reductions earlier this year, boosted overall results pay day loans. But that won’t last as Chrysler and General Motors Corp. are shutting plants in May and June, which could send industrial production lower, economists said.

Also Friday, a Reuters/University of Michigan index of consumer sentiment rose to an eight-month high in May.

Meanwhile, the Labor Department said its consumer price index was flat last month, meeting expectations. The tame inflation performance reflected a second monthly drop in energy costs and a third straight decline in food prices.

Over the last year, consumer prices have fallen 0.7 percent, the largest 12-month decline since a similar drop for the year ending in June 1955.

Falling prices can be good for shoppers. But over the long term, they can erode wages and cause consumers to postpone purchases, leading to steep drops in production. But broad price declines aren’t affecting goods outside food and energy, economists said. Core inflation, which excludes food and energy, rose 0.3 percent last month. It was the biggest jump since July, but about 40 percent of the gain came from a huge rise in tobacco prices, reflecting higher federal taxes.

"Inflation’s not a problem if you don’t smoke," Vitner said.

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The U.S. Treasury Department said on Thursday that four insurers had been approved for access to the government’s bank bailout plan.

A Treasury spokesman said Hartford Financial, Prudential Financial Group, Lincoln National Corp and Prudential Financial Inc met requirements for access to the government’s Capital Purchase Program.

The firms qualified because of their status as bank holding companies and because they each applied for access prior to a November 14, 2008, deadline, the Treasury spokesman said easy to get unsecured personal loans.

(Reporting by Glenn Somerville; Editing by Gary Hill)

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NEW YORK — Advanta Corp., a credit card lender to nearly 1 million small businesses, will close all its cardholders’ accounts next month in a last-ditch effort to stem losses.

Analysts said the move adds to already growing concerns that the company might not be able to survive. And while other card issuers won’t likely fall into Advanta’s situation, analysts said, worries remain that they might decide to cut credit lines further on small businesses.

"Advanta’s problems call into question the business model at the end of the day," said Keefe, Bruyette & Woods card industry analyst Sameer Gokhale. "Are these really small-business cards, or just consumer cards with really high credit lines?"

As of late March, Advanta wrote off about a fifth of its credit card debt as unrecoverable.

In anticipation of losses escalating further, Advanta said late Monday that on June 10 it will shut down all accounts. June 10 is when Advanta will offer to pay off investors who hold securities backed by its cards — a type of payout known as an "early amortization" of a trust. This way, Advanta said, the company can "maximize its capital and its liquidity measures."

It is the first early amortization of a trust since First Consumers National Bank’s in 2003, said JPMorgan structured finance analyst Christopher Flanagan affordable car insurance.

Advanta is offering holders of its card-backed securities between 65 cents and 75 cents on the dollar. Flanagan said it is unlikely investors will accept the deal, which could put Advanta in an even more precarious position.

Advanta’s business relied on this trust as a means of funding, he said. "The question now is, do they want to fund it, say, through deposits? Or are they just not going to stay in business?"

The company, based in Spring House, Pa., started out as a lender to teachers in 1951 and by 2001 was concentrating solely on credit cards to small businesses. It became the largest card issuer focused on small-business customers.

When the economy began sliding in late 2007, missed payments started climbing. Not only was Advanta’s customer base mostly small businesses, which tend to have much higher credit lines than the average consumer, but a quarter of its receivables came from California and Florida. In those two states, popular among small businesses, real estate values fell sharply.

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Q&A — Understanding antitrust law and what it means

From busting up John D. Rockefeller’s Standard Oil Trust in 1911 to going after Microsoft’s use of its Windows monopoly, antitrust policy has been an important element of the U.S. regulatory landscape.

Now, in tough recession times, the Obama administration is swinging back the pendulum, maintaining that lax enforcement over the last decade has worsened economic woes and hurt consumers by failing to protect business competition.

First of all, what is antitrust? What does it mean, and what is its purpose?

Antitrust laws are designed to prevent combinations of companies that would boost their dominance in a market so much that it could hurt competition and, by extension, consumers. Two more definitions help explain it:

— Monopoly, where a company is the only one that produces a product or service.

— Trust (sometimes called a cartel), in which a group of companies, or countries, agree to assert power over the price or the supply of a product.

So how does it work in the government?

Antitrust policies, administered by the Justice Department and the Federal Trade Commission, can either ban proposed mergers of companies outright or put conditions on them — requiring some assets of the combined company to be sold off instant faxless payday loans.

That happened amid the financial crisis late last year, when the Justice Department allowed PNC Financial Services Group Inc.’s $5.6 billion buyout of National City Corp. — provided that Pittsburgh-based PNC divest 61 branches of Cleveland-based National City.

Mergers could multiply as the recession pushes more companies to consolidate.

How do they decide whether a particular merger would hurt competition?

A lot of market analysis is done by experts at the federal agencies — not to mention many legal precedents.

The U.S. Supreme Court, in its decision nearly a century ago breaking up the Standard Oil Trust, wrote that without unlawful conduct, size and accumulated capital and power alone "are not monopolizing in a legal sense."

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Two big unions that represent auto and postal workers want Crown-owned Canada Post to buy Canadian-made vehicles.

Ken Lewenza, president of the Canadian Auto Workers, and Denis Lemelin, president of the Canadian Union of Postal Workers, said yesterday Canada Post should be buying 4,500 to 5,500 new trucks including minivans that are made here during the next few years.

The union leaders said Ottawa should preserve and create employment instead of destroying jobs through more international trade agreements that do not allow fair access of goods to other countries quick cash advance. "It provides the perfect opportunity for Canada Post to show leadership during a time of economic crisis by ensuring these vehicles are made in Canada."

Tony Van Alphen

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WASHINGTON – Fannie Mae says it needs $19 billion (dollar figures U.S.) in additional government aid after posting a loss of $23.2 billion in the first quarter as the taxpayer bill from the housing market bust mounts.

The mortgage finance company, seized by federal regulators last September, posted a quarterly loss of $4.09 per share on Friday. That compares with a loss of $2.5 billion, or $2.57 a share, in the year-ago period cash advance now.

The results were driven by $20.9 billion in credit losses due to declining housing market conditions and $5.7 billion in writedowns of the value of its mortgage-backed securities.

The request for federal aid is its second since the takeover. The company received about $15 billion earlier this year.

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A recovery in U.S. consumer spending on discretionary goods could take “many, many years,” the chief executive of U.S. No.2 bookseller Borders said on Thursday.

“Our view increasingly is that in certain discretionary categories the total market has shifted down — depending on the category, by between 15 and 25 percent,” Ron Marshall told the World Retail Congress.

“It may be many, many years before we regain the spending levels we enjoyed just last year.”

Marshall said confidence in the U.S. housing and equity markets had been shaken, and consumers could take many years to reduce their debts.

As well as the consumer downturn, Borders has been hit hard by intense competition from online rivals like Amazon free credit report and score.com and Marshall has slashed costs, including axing jobs and closing stores, in a bid to revive the group’s fortunes.

“We’ve worked very, very hard to reduce our permanent cost structure and improve our financial structure so that we could be profitable at that lower level (of consumer activity).

“If you’re too pessimistic, you’re well placed for operating leverage on the upside,” he said.

(Reporting by Mark Potter, Editing by Sarah Morris)

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