Inflation has likely slowed, but economists warn we're not out of the woods yet StephHughes95
The anticipated decline comes as global supply chain disruptions are beginning to ease and lower commodity prices are working to cool the consumer price index, the economy’s main gauge on the growth of the cost of goods. Those easing pressures have led the Royal Bank of Canada’s economics team to conclude that the recent burst of inflation likely topped out at 8.1 per cent in June.Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.
The Bank of Montreal’s chief economist, Douglas Porter, echoed this sentiment, though warned that like the U.S., which had recently reported a hotter than expected annualized rate of“A weaker currency could further fuel consumer goods and imported food prices,” Porter wrote in a note to clients late last week. “To this stage, Canadian grocery prices have actually been less fiery than their U.S. counterparts .
Comparing Canada to its neighbour south of the border, Canadian Imperial Bank of Commerce chief economist Avery Shenfeld noted that the difference in how shelter costs are treated in Canadian inflation figures should have cost pressures, excluding food and energy, falling faster than the U.S.Article content
However, Shenfeld also expects that since the price of goods excluding food and energy is driven upward by some supply chain issues and domestically driven services inflation is likely to peak in the second quarter of next year, core inflation won’t dip below the three per cent mark until the second half of next year.
Despite the common refrain among economists that high inflation is not here to stay, there remain risks on the horizon. In his note, Shenfeld raised concerns of a wage-price spiral, a trend where workers seek higher wages to keep up with rising living costs, a pattern that can cause high inflation to become entrenched. Shenfeld specifically pointed to the recent success U.S.
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