Businesses brace for high inflation to stick around over next two years: BOC survey

The Bank of Canada says 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 Bank of Canada’s latest Business Outlook Survey, which tracked business sentiment in the first quarter of 2022, revealed that Canadian companies expect it will take three years for inflation to reach the central bank’s two per cent target in three years.

The report also revealed that the number of businesses navigating supply chain challenges is at a record high.

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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.

The report also found that Canadian companies expect strong sales growth in 2022, but at a more moderate pace compared to last year.

The Bank of Canada also today released its quarterly consumer survey, which revealed that Canadians’ short-term inflation expectations reached record high levels in the first quarter of 2022.