Two new reports issued by the Bank of Canada today, Monday, revealed an increase in inflation expectations from Canadian businesses and consumers.

In a business outlook survey released today, Monday, the central bank stated that companies' short-term inflation expectations have increased, and companies expect inflation to remain high for a longer period than they anticipated in the previous survey.

The bank stated in its report, which indicated that companies expect wages and prices to grow at a faster pace: "Many companies continue to report plans to increase wages to attract and retain workers."
Additionally, an increasing number of companies pointed to the rising cost of living as an important source of wage growth, with nearly half of the companies expecting wage increases to remain above pre-pandemic levels over the next 12 months.

The report also mentioned that companies expect sales growth to begin slowing and return to normal after the rapid recovery from the pandemic.

Labor shortages and supply chain bottlenecks remain major issues, alongside supply chain problems that are taking longer to resolve than previously expected, according to the report.

In response, the business outlook survey stated that companies are reshaping supply chains and holding more inventory than usual, and the majority of companies plan to invest and hire more.

However, the Bank of Canada noted that long-term inflation expectations from businesses remain stable between 2 and 3 percent.
At the same time, the bank’s Canadian consumer expectations survey indicates that consumer inflation expectations have also risen amid concerns about food, gas, and rent prices.