Statistics Canada reported last month that annual inflation in May rose to 7.7%, the highest level since 1983
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Canadian Press
Ottawa — A new pair of reports from the Bank of Canada , Pointing out rising inflation expectations by Canadian companies and consumers.
In a business outlook survey released Monday, central banks expect companies to have higher expectations for short-term inflation, and companies expect inflation to be higher 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 referring to rising living costs as an important source of rising wages. Almost half of the companies have 12 rising wages in the future. We expect it to remain above pre-pandemic levels for more than a month. ”
The report also reports that sales growth has slowed, usually following a rapid recovery from the pandemic. He said the company expects to return to.
According to the report, labor shortages and supply chain bottlenecks continue to be important issues that supply chain problems take longer than previously expected to resolve. I am.
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 for higher inflation and rising interest rates are affecting consumer confidence.
Banks pointed out that low-income Canadians and older people are more interested in food prices and rents than younger 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 mention sticking to tight grocery budgets by buying more common products or not buying items that seem less needed. Some people rely on gardening for food or use cheaper commuting methods such as bicycles, "the report said.
However, the report also believes that most respondents believe that banks in Canada have the credibility and tools to bring inflation back into control, with respect to the bank's ability to reach its inflation target. They have discovered that their beliefs have not changed substantially from before Pandemic.
Statistics Canada reported last month that annual inflation in May rose to 7.7%, the highest level since 1983.
Bank of Canada strives to bring inflation back to its target of 2%.
The central bank has raised interest rates three times so far this year in order to raise the key policy rate to 1.5%. The next interest rate decision is set for July 13, and many private sector economists expect the Bank of Canada to raise its key interest rate by three-quarters percentage points.
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