The Bank of Canada is forecasting that June’s inflation reading will exceed 8% and remain at
that level for several months.
Bank of Canada Governor Tiff Macklem made the inflation forecast during a talk he gave to the
Canadian Federation of Independent Business.
“Inflation is high sevens. It’s probably going to go a little over eight (8%). We know oil prices
were very high in June, so I wouldn’t be surprised to see it move up,” Macklem said during his
talk to the business group.
Canada’s inflation rate stood at 7.7% in May, the highest level since January 1983.
Macklem reiterated that the Bank of Canada expects inflation to average around 8% for the next
few months, then fall to around 3% by the end of next year and to its 2% target range in 2024.
The central bank governor also made clear that he remains concerned about a wage-price
spiral, where businesses raise wages to keep workers and then pass the higher costs on to
households, who then want higher wages to help them manage inflation.
“You can see this creates a self-perpetuating cycle,” said Macklem, adding that the central bank
will take the action needed to get inflation under control.
The June inflation data is scheduled to be released by Statistics Canada on July 20.