Canadians’ Perception of Inflation Doesn’t Match Actual Data, Bank of Canada Survey Shows
Canadians Perceive High Inflation Despite Data, Bank of Canada Survey Reveals
A recent survey conducted by the Bank of Canada has shed light on a significant gap between Canadians’ perception of inflation and the actual economic data. The findings reveal that Canadian consumers have a persistent expectation of high inflation over the next year.
Perception vs. Reality
Canadians believe that inflation is on the rise, largely due to consistent price increases in essential sectors such as food, gasoline, rent, and housing. Interestingly, despite recent indications of a slowdown in food price growth according to the consumer price index, food inflation remains a key factor influencing overall inflation perception.
The Rising Cost of Living
The increasing cost of living has become a major concern for Canadian consumers. Many attribute these rising costs and the seemingly high inflation to the Bank of Canada’s interest rate hikes. One respondent, for instance, expressed their struggles with an ever-growing grocery bill while trying to feed a family of five.
Challenges for the Central Bank
According to Desjardins, these persistent inflation expectations pose a challenge for the Bank of Canada. He predicts that the bank will likely take a “hawkish hold” stance, acknowledging the inflationary issue but refraining from immediate action to combat it.
Businesses and Inflation
The survey also reveals that businesses are planning larger and more frequent price increases than usual over the next year. Around half of these businesses have yet to return to their normal pricing practices, as they anticipate that inflation will remain high and above 2% for the next three years or more.
Impacts on Businesses and Households
Both businesses and households are feeling the impact of higher interest rates. Many companies anticipate that increased borrowing costs will limit their sales and investment plans in the coming year. Similarly, numerous households reported being affected by higher interest rates, resulting in reduced spending due to these economic pressures.
This article was created to provide valuable insights and reviewed by an editor. For more information, please read our Terms and Conditions.
