Expert warns of food consumption habits amid rising prices
A new survey by Dalhousie University's Agri-Food Analytics Lab asked Canadians about their food consumption habits amid rising prices.
The Bank of Canada said Monday that Canadian businesses expect average inflation to remain elevated over the next two years, but see interest rate moves and better supply chains cooling things off longer term.
The central bank's latest Business Outlook Survey, which tracked business sentiment in the first quarter of 2022, found that more than two-thirds of businesses anticipate inflation will be above three per cent, on average, over the next two years, while two-fifths expect it to be above four per cent. Canadian companies expect it will take three years for inflation to return to the bank's two per cent target, the report added.
"If we still needed to cement the case for a half-point rate hike in April, the Bank of Canada's Business Outlook survey provided it, at least in terms of inflation expectations," said CIBC chief economist Avery Shenfeld in a note.
He said that the survey "statistically has no predictive power," but believes that the Bank of Canada is watching business sentiment and these results closely.
"The Bank will take note that a strong majority see inflation over three per cent for the next two years, and that's something that the Bank wants to lean against," Shenfeld said.
Nathan Janzen, economist at RBC, added in an interview that the new data further reinforces the Bank of Canada's desire and intention to move more aggressively on interest rate hikes.
"It will certainly be more aggressive than what we saw coming out of the '08-'09 recession or even the oil price collapse in 2015," Janzen said.
The report also revealed that the number of businesses navigating supply chain challenges is at a record high, and that these pressures are continuing to impact the ability to meet growing demand. Persistent labour shortages are adding to the bottleneck as well, the report said.
Approximately half of the Canadian businesses surveyed also expect to face upward cost pressures tied to higher energy and commodity prices due to the war in Ukraine, based on an additional study conducted in March to supplement the Business Outlook Survey. However, there is still not enough clarity around how much Russia's invasion of Ukraine will impact sales, investment spending and hiring goals.
Despite these hurdles, the report said that Canadian companies expect strong sales growth in 2022, albeit at a more moderate pace compared with last year. Signals of greater domestic and foreign demand are helping fuel healthy sales expectations, the report added.
The Bank of Canada on Monday also released its quarterly consumer survey, which showed that Canadians' short-term inflation expectations reached record high levels in the first quarter of 2022, as concerns rise about the ability to get it under control.
The consumer survey also found that Canadian workers don't really see their wages increasing enough to match the pace of inflation.
Many Canadians don't expect high inflation to last forever though, the report added. The consumer survey found that Canadians expect inflation stability in the longer term.
This report by The Canadian Press was first published April 4, 2022
A new survey by Dalhousie University's Agri-Food Analytics Lab asked Canadians about their food consumption habits amid rising prices.
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