A new pair of reports from the Bank of Canada points to rising inflation expectations by Canadian businesses and consumers.
In a business outlook survey released Monday,central banks expect rising inflation for short-term inflation, and companies expect inflation to be longer than before. A survey that said it was.
"Many companies continue to report plans to raise wages to attract and retain workers," banks said in a report, with companies wages and prices at a faster pace. He suggested that he expected to grow.
"More and more companies are citing rising living costs as an important source of wage growth. Almost half of the companies are pandemic with rising wages over the next 12 months. We expect it to continue to exceed previous levels. ""
The report also predicts that sales growth will slow and return to normal, following a rapid recovery from the pandemic. Said that. According to the
report, labor shortages and supply chain bottlenecks continue to be important issues, as supply chain problems take longer than previously expected to resolve.
In contrast, according to company outlook surveys, companies are restructuring their supply chains, holding more inventories than usual, and the majority of companies invest more and hire more. I am planning.
However, the Bank of Canada said long-term expectations of inflation by companies are stable between 2-3 percent.
Meanwhile, a survey of consumer expectations in Canada shows that consumer inflation expectations are also rising due to concerns about food, gas and rent prices.
The Consumer Report also stated that expectations of higher inflation and rising interest rates are affecting consumer confidence.
Banks pointed out that low-income Canadians and the elderly are more interested in food prices and rents than young respondents and high-income households.
Consumers, especially low-income earners, are adapting to high inflation by cutting spending, deferring large purchases, and looking for cheaper alternative discounts and options. Stated.
"Some consumers stick to tight grocery budgets by buying more common products or not buying items that they think are less needed. However, the report also believes that most respondents have the credibility and tools to bring inflation back into control. Pandemic found that their beliefs in banks' ability to reach inflation targets haven't changed much from before.
The Canadian Bureau of Statistics last month raised annual inflation to 7.7% in May. And reported that it had reached its highest level since 1983.
Bank of Canada strives to bring inflation back to its target of 2%.
Central banks have key policies In order to raise interest rates to 1.5%, we have raised interest rates three times so far this year. The next rate decision is set for July 13, and many private sector economists are dominated by the Bank of Canada. We expect to raise interest rates by three-quarters percentage points.
This report by Canadian Press was first published on July 4, 2022.
