Broad Inflation At 31-Year High
Updated: Sep 9, 2022
COVID-19 caused high levels of inflation in 2021 and into 2022 as the pandemic shifted demand away from services and towards goods while also disrupting global supply chains, says Aon. Its ‘Inflationary Trends Canada’ report shows broad inflation is at a 31-year high of 6.8 per cent year over year compared with an average of about two per cent in the two decades pre-COVID. The conflict in Ukraine has also led to a burst of higher inflation as sanctions and supply chain disruptions came into effect. Inflation is expected to moderate over the next one to two years to levels that are higher than pre-COVID years, but less than what was seen in 2021. However, the Bank of Canada expects high inflation to remain throughout 2022, but to ease to around 2.5 per cent in the second half of 2023 and return to two per cent target in 2024. A Reuters survey of economists indicates the inflation rate will peak at or above six per cent for the next few months, with their 2022 year-end forecasts ranging from 3.3 per cent to 5.8 per cent.