Canada’s central bank says businesses and consumers are increasingly believing that the pace of price increases will continue on its hot rate for longer.
The Bank of Canada’s pair of quarterly surveys of businesses and consumers show respondents expect the annual rate of inflation to remain above the Bank of Canada’s two per cent target for the rest of the year.
Two-thirds of the firms that took part in the bank’s business outlook survey anticipate inflation to stay above three per cent over the next two years.
Respondents in the survey of consumer expectations expected inflation to remain above four per cent for the next two years, and 3.5 per cent five years out.
For consumers, inflation has become what the central bank describes as the most important economic issue, more so than taxes and jobs.
The consumer survey also suggests Canadians doubt policy-makers can easily rein in elevated inflation rates, with two-thirds of respondents saying it is more difficult now to control inflation than it was before the pandemic.