Bank of Canada\u0027s latest surveys of business and consumer expectations show growing doubt about its ability to put a lid on inflation
. The results were concerning. Elevated numbers of companies continue to struggle with supply bottlenecks and labour shortages, suggesting the “presence of excess demand in the economy,” which is inherently inflationary.
Almost 80 per cent of respondents said they thought inflation would be above three per cent in a year, the most ever, according to Bank of Montreal economist Shelly Kaushik. Nearly half of companies said they expect wage increases will remain above pre-pandemic levels for the next 12 months, in part because workers are insisting on being compensated for a higher cost of living.
The survey has a relatively small sample size: the Bank of Canada’s regional offices conduct 100 interviews per quarter from a rotating roster of businesses. However, policymakers trust the results, and the report ranks as one of the most important inputs into interest-rate decisions.Article contentShort-term expectations of inflation climbed to the highest since the central bank began polling consumers in 2014.
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