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The gap between how Canadians perceive inflation and what is in the official data is \u201cunusually wide,\u201d a quarterly survey by the Bank of Canada has found.<\/p>\n
The survey of consumer expectations released Oct. 16 said Canadians\u2019 perception of rising prices remains elevated and this is leading to persistently high inflation expectations over the next 12 months.<\/p>\n<\/div>\n
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\u201cThe gap between perceptions of inflation and actual inflation is unusually wide,\u201d said the survey.<\/p>\n
Expectations for growth in specific prices \u2014 food, gasoline, rent and housing \u2014 are either rising or stable at very high levels, it said, adding there is a widespread view that prices are still rising quickly.<\/p>\n
Food inflation was frequently mentioned as the main factor influencing respondents\u2019 perception of overall inflation, the survey said, though food price growth eased in the last reading of the consumer price index.<\/p>\n
\u201cI\u2019m feeding a family of five and my grocery bill is through the roof. Prices seem to be still rising,\u201d one respondent said.<\/p>\n
The cost of living is the most pressing concern for Canadian consumers, the survey found, and many of the people polled thought that Bank of Canada interest rate hikes were increasing these costs and keeping inflation high.<\/p>\n
Consumers still expected interest rates to remain high a year from now.<\/p>\n
Sticky inflation expectations are problematic for the central bank, said Desjardins economist Royce Mendes, in a note to clients.\u00a0\u201cAs a result, we continue to believe the Bank of Canada will issue a hawkish hold later this month.\u201d<\/p>\n<\/div>\n
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The central bank\u2019s business outlook survey found that businesses are still planning to make larger and more frequent price increases than usual over the next 12 months.<\/p>\n
Pricing practices of roughly half of businesses are not yet back to normal, it said.<\/p>\n
\u201cAlthough cost and pricing pressures continue to moderate, they are still expected to be higher than normal in the coming year,\u201d the report said.<\/p>\n Related Stories<\/p>\n