Consumers and companies are expecting more inflation

“Many companies are still trying to raise their salaries to attract and retain workers,” the central bank said in a report, suggesting that companies expect wages and prices to increase at a faster pace.

“In addition, a growing number of respondents indicated that the increase in the cost of living is an important reason for salary increases. Nearly half of companies expect that their salary increases will remain above their pre -planned levels for more than a year. »

The report also indicates that companies are expecting sales growth to begin to slow and return to normal after the rapid recovery of the pandemic.

Manpower losses and supply chain trespasses continue to be key problems, supply chain problems taking longer to resolve than planned, according to the report.

In response to this context, the survey on the perspectives of companies indicates that companies are reconfiguring their supply chains and conserving more stocks than usual, and that a majority of companies are willing to invest and hire. davantage.

However, the Bank of Canada pointed out that long -term expectations for corporate inflation remained stable, between 2 % and 3 %.

Some consumers are more preoccupied

Meanwhile, the bank’s Canadian survey of consumer expectations suggests that the latter is also facing stronger inflation, and their concerns revolve mainly around food prices, goods and goods.

The consumer report also pointed out that expectations for inflation and interest rates affected consumer confidence.

The bank noted that low -income Canadians and older people were more preoccupied with grocery prices and lobbies than younger respondents and higher -income households.

Consumers, especially those with low incomes, are adapting to high inflation by reducing their expenses, reporting significant returns, by looking for discounts and options for less expensive alternatives, the bank explained.

“Some have mentioned that they have a strict budget for the grocery store and buy more home brands, or that they have stopped claiming less essential things judged. Others go further to their harvests or to more economical modes of transport, such as the bicycle, ”the report said.

The report also revealed that most respondents estimated that the Bank of Canada has the credibility and the necessary tools to control inflation, and that their belief in the bank’s ability to achieve its inflation target did not. not much has changed since before the pandemic.

Statistics Canada showed last month that annual inflation was set at 7.7 % in May, its highest level since 1983.

The Bank of Canada has set its direct interest rate target in order to bring inflation to its target of 2.0 %.

The central bank has raised its rates three times since the beginning of the year, to bring its holding rate to 1.5 %. Its next decision on interest rates is set for July 13 and many private sector economists are waiting for it to raise its operating rate to three -quarters of a percentage point.

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