One more interest rate hike expected: Challenging economic times ahead in 2023

Just about everyone notices.

Groceries are more, and so is the interest on any debt.

Just about everything has gone up except wages.

"Over these last 12 months or so, when inflation went up, the average wage rate did not catch up with inflation," said Anupam Das, economist and professor at Mount Royal University.

"So people have been losing their real income for a while now."

According to a report released by TD Bank last month, Albertans' real wages have been falling at about a five per cent pace over the past year as the cost of food and fuel have inflated quickly.

In an effort to curb inflation, the Bank of Canada has hiked rates seven times since last March.

Its next scheduled interest rate announcement is Jan. 25.

While inflation is showing signs of coming back to healthier levels, many money watchers are expecting one more increase of .25 per cent.

Rate increases are used to slow the economy and bring prices under control, but they come with the risk of hitting the brakes a little too hard and triggering a recession.

"In the next 12 months, it's possible that the economy will slow down to an extent that people will actually start losing jobs," said Das, though he was careful not to say a recession is guaranteed at this point.

The TD Bank report also forecast Alberta's GDP growth would slow to 1.9 per cent for 2023 – less than half the 5.1 per cent reported in 2022.

It's significant, but analysts believe the province will still be one of the growth leaders in the country.