About a quarter of Canadian businesses believe inflation will not return to the 2% target over the next four years, according to a Bank of Canada (BoC) survey released Monday.
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High prices for energy, food and housing are among the main obstacles to a rapid return to the inflation target, according to companies surveyed by the BoC.
There are also fewer of them looking to increase their prices than last quarter, particularly due to weaker demand and increased competition compared to the last 12 months.
“Despite this, few companies have announced plans to cut prices, and the number of those planning to do so remains at historical averages,” the BoC wrote in its survey.
Additionally, most respondents said they did not feel the need to hire new employees and reported a labor shortage that was “less severe than 12 months ago.” On the other hand, wage growth on average “is expected to be stronger than usual over the next 12 months,” largely due to adjustments in the cost of living.
In general, short-term inflation expectations are falling “slowly” and companies expect inflation to remain elevated over the next two years.
The survey was conducted in late 2023 among 700 to 800 Canadian business leaders.