Nujoud Al-Malis, The Canadian Press
Published Sunday, September 17, 2023 at 2:50 PM EST
OTTAWA – Economists predict Economic inflation Growth accelerated again to about four percent last month, reversing earlier progress made as gasoline prices rose. Economic inflation higher.
Statistics Canada’s August CPI report is expected Tuesday to show the annual report Economic inflation The rate rose for the second month in a row.
Canada Economic inflation The interest rate fell to 2.8 per cent in June, entering the Bank of Canada’s target range of 1 to 3 per cent for the first time since March 2021. However, celebrations for reaching this benchmark were short-lived, as Economic inflation It was set for the following month.
Desjardins managing director and head of macro strategy Royce Mendes said he expected the headline Economic inflation It is expected to reach four percent for August, up from 3.3 percent in July.
“We expect the CPI data to reveal that Canadians’ pocketbooks are hurting from rising prices, once again, largely as a result of gasoline prices,” Mendes said.
Oil prices have risen steadily throughout the summer, topping $90 a barrel this week. In comparison, June prices were near $70 per barrel.
Meanwhile, TD expects Economic inflation It rose to 3.8 percent. Chief Economic Officer James Orlando said there was another factor likely contributing to the rise Economic inflation In August is the reality of that Economic inflation It started to decline a year ago.
“We have seen a decline in… Economic inflation Last year, which means there will be some basic (vernacular) influences that will move to a higher level Economic inflation “Reading next week,” he said.
The Bank of Canada has kept the door open for further interest rate hikes in part because it expects it to happen Economic inflation Getting down to two percent will take some time. But economists say the recent slump in the economy is likely to convince the central bank to remain on the sidelines.
Earlier this month, the Bank of Canada chose to keep its key interest rate steady at five per cent after raising interest rates at its previous two meetings. The decision was taken after recently released data showed the economy contracting in the second quarter.
There are other signs of a slowdown in the Canadian economy as well: The job market is no longer as tight as it was a year ago with job openings declining and the population growing.
Orlando said the fact that the economy is slowing gives the Bank of Canada justification to keep interest rates as they are, even if… Economic inflation It moves upward in the short term.
“All the things you worry about can lead to more local matters Economic inflation “In Canada… they are starting to show a very rapid slowdown in the Canadian economy,” Orlando said.
Although progress is being made Economic inflation The decline signals signs of stalling, and economists and the Bank of Canada expect that tighter economic conditions caused by higher interest rates will eventually lead to smaller price increases.
“Although we do not yet see convincing evidence of this Economic inflationAlthough pressures are moving towards the 2 percent target from where they have been stuck for some time now, I believe it is only a matter of time before interest rate increases make their way through this system, to pull economic activity down enough. Economic inflation “To two percent,” Mendez said.
However, in the meantime, the Bank of Canada will make sense Economic inflation Rising again for the Canadians.
after Economic inflation Released Tuesday, Bank of Canada Deputy Governor Sharon Kozicki is expected to deliver a speech at the University of Regina.
Both Orlando and Mendes said that the central bank would have to explain why interest rates rose year on year. Economic inflation The number is not the only indicator he cares about.
Other numbers, such as basic measures of Economic inflation Which excludes price fluctuations, is of particular importance to the central bank.
“The number that everyone sees will be 4%, or thereabouts,” Mendez said.
“But the Bank of Canada needs to come out and be very clear about the utility of the underlying assets Economic inflation As a predictor of the future Economic inflationOr the benefit of looking at other parts of the economy.
This report by The Canadian Press was first published Sept. 17, 2023.