Price hikes won’t be as steep in year ahead, some firms tell Bank of Canada
A pair of surveys released from the Bank of Canada on Monday show many firms’ price plans are “slowly returning to normal” after a period of elevated inflation, thanks in part to a slowdown in consumer spending and easing in the labour market.
The central bank’s quarterly Business Outlook Survey shows that firms are expecting the size and frequency of their price changes to “moderate” in the next 12 months. Those surveyed pointed to weaker demand and more competition over the past year as putting “downward pressure” on price growth.
Some businesses did indicate that they’ll continue to pass on bigger and more regular price hikes to their customers. These firms said they’re dealing with high wage costs and are facing higher input prices themselves, or are trying to boost profit margins that faltered over the past few years.
For the rest who are cooling their price hike plans, they intend to curb costs elsewhere by slowing hiring or seek to grow their revenues in other ways.
That could be tough heading into 2024, as the survey shows the outlook for future business is deteriorating on aggregate.
Three-quarters of businesses say they’re feeling the pinch of higher interest rates, and are less likely to hire or make new investments amid expectations for declining sales this year.
Other firms, particularly those in industries like retail, food, and accommodation and housing, say they are struggling with a lack of access to credit.
Expectations for inflation, both in the business outlook and in the Bank of Canada’s counterpart consumer survey, showed some signs of easing in the fourth quarter. The central bank watches inflation expectations as one of the metrics it uses to guide future interest rate decisions.
While businesses
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