{"id":79814,"date":"2026-10-26T17:59:08","date_gmt":"2026-10-26T17:59:08","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2026\/10\/26\/this-pipeline-on-early-warning-inflation-pressures-is-lit-up-warns-scotiabank-economist\/"},"modified":"2026-10-26T17:59:08","modified_gmt":"2026-10-26T17:59:08","slug":"this-pipeline-on-early-warning-inflation-pressures-is-lit-up-warns-scotiabank-economist","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2026\/10\/26\/this-pipeline-on-early-warning-inflation-pressures-is-lit-up-warns-scotiabank-economist\/","title":{"rendered":"This pipeline on early warning inflation pressures is &#039;lit up,&#039; warns Scotiabank economist"},"content":{"rendered":"<p> \n<br \/><iframe loading=\"lazy\" title=\"Why Bank of Canada can afford to stay on sidelines for now\" width=\"1080\" height=\"608\" src=\"https:\/\/www.youtube.com\/embed\/3QJTvwS38t0?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/p>\n<p> Under-the-radar costs to produce goods in Canada came in \u201chot,\u201d possibly foreshadowing higher prices across the economy, says one economist. <\/p>\n<p> \u201cEverything this country produces is lit up,\u201d Derek Holt , head of capital markets economics at Bank of Nova Scotia, said about the industrial product price index (IPPI) and raw materials price index (RMPI), which accelerated two per cent and 4.8 per cent, respectively, in September from August, overshooting estimates of 0.9 per cent and 2.9 per cent. <\/p>\n<p> The prices of energy and refined products such as diesel were the main contributors to the increase in the IPPI as they rose 12.1 per cent, Statistics Canada said. Diesel fuel prices jumped 18.4 per cent month over month. <\/p>\n<p> \u201cDiesel fuel prices made the biggest impact on this increase,\u201d the agency said last Thursday. <\/p>\n<p> This was the 24th straight monthly increase for the IPPI, as diesel fuel soared 104 per cent year over year. <\/p>\n<p> Prices also rose across other categories, with unwrought gold, silver and platinum group metals and their alloys rising 32 per cent, the \u201cnext largest contributions\u201d to the index, Statistics Canada said. <\/p>\n<p> Unwrought copper and copper alloy prices were up 46 per cent and unwrought aluminum and aluminum alloys increased 27 per cent. <\/p>\n<p> \u201cBusiness-to-business and importer-to-business, all those parts of the supply chain are aggressively passing on their cost increases through not just oil and gas, although gas and diesel are a part of that, but across the whole suite of the commodity pressures,\u201d Holt said. <\/p>\n<p> He said it is possible producers will absorb some of the rising costs because of healthy margins, but that tactic can only go so far in shielding the economy, businesses and consumers if shareholders start to \u201crevolt\u201d and demand higher prices be passed on. <\/p>\n<p> \u201cWe\u2019re starting to see the early days of that in the consumer prices,\u201d he said. <\/p>\n<p> Charles St-Arnaud, chief economist at Servus Credit Union in Edmonton, said the IPPI and RMPI data points aren\u2019t \u201cmajor indicators,\u201d but they do provide signals on the cost pressures businesses face. <\/p>\n<p> In the post-pandemic run-up in inflation , the IPPI reached its peak a year before the CPI topped out at 8.1 per cent in June 2022. <\/p>\n<p> \u201cAt some point, those costs are going to be likely passed onto consumers or into consumer goods prices,\u201d St-Arnaud said. So, that\u2019s why it\u2019s good to track them.\u201d <\/p>\n<p> The September consumer price index (CPI) released last week by Statistics Canada accelerated to 3.1 per cent year over year from three per cent in August, though the core measures of the CPI that the Bank of Canada looks at slowed to less than two per cent, which is the central bank\u2019s target for inflation. <\/p>\n<p> But Holt said there is a trend of inflation, minus food and energy, coming in above the two per cent inflation target. <\/p>\n<p> Core inflation \u201cis the gold standard\u201d for the Bank of Canada on inflation, but he said an argument can be made for focusing on less-cited measures such as IPPI and RMPI. <\/p>\n<p> \u201cThere\u2019s a pipeline argument, so a pipeline of pressures that you can monitor before it shows up in CPI, and so producer prices are in that category of those pipeline measures,\u201d he said. \u201cIt provides those early warning signals about what could show up in consumer prices further down the road, and it\u2019s sending some pretty clear warnings.\u201d <\/p>\n<p> The Bank of Canada\u2019s latest Business Outlook Survey and Canadian Survey of Consumer Expectations said inflation expectations rose in the third quarter due to high energy prices and the breakdown in trade talks between Canada and the United States. <\/p>\n<ul class=\"related_links\">\n<li>Why economists think the Bank of Canada may hike rates on Wednesday<\/li>\n<li>The inflationary vibe affecting bond yields \u2014 and odds of a rate hike<\/li>\n<\/ul>\n<p> <em>\u2022 Email: gmvsuhanic@postmedia.com <\/em> <\/p>\n\n<br \/>This pipeline on early warning inflation pressures is &#039;lit up,&#039; warns Scotiabank economist<\/a><br \/>\n<br \/>2026-10-26 17:59:08<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Under-the-radar costs to produce goods in Canada came in \u201chot,\u201d possibly foreshadowing higher prices across the economy, says one economist. \u201cEverything this country produces is lit up,\u201d Derek Holt ,&#8230;<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[31],"tags":[],"class_list":["post-79814","post","type-post","status-publish","format-standard","category-economy"],"_links":{"self":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/79814","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/comments?post=79814"}],"version-history":[{"count":0,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/posts\/79814\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/media?parent=79814"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/categories?post=79814"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.pantheregroup.com\/api\/wp\/v2\/tags?post=79814"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}