• Most businesses anticipate inflation will exceed 3% on average for the next two years, wit ha quarter of businesses expecting inflation above 2% for three years or more

I think the 'on average' bit is an important caveat here. If you assume high inflation this year, that means it could come down to target next year and still be above 3% 'on average. In addition, the lower number of worried businesses over a three year term should be encouraging to the BOC

  • Businesses expect average wage increase of 5.8% over the next 12 months
  • About half of firms expect supply chain challenges to persist until end of 2023 or beyond
  • Record-high number report problems with logistics and supply chain
  • Firms anticipate that sales growth will begin to moderate from exceptionally high rates amid greater uncertainty
  • Employment intentions 66% vs 62% prior
  • Investment intentions 37% vs 42% prior

Separate headlines from consumer survey:

  • Inflation expectations have risen, especially food, fuel and rent costs
  • Canadians plan to spend significantly more over the coming 12 months
  • Inflation expectations at record highs for 1-year and 2-years from now
  • 1-year ahead inflation expectations 6.8% from 2.2%

The Bank of Canada has moved ahead of this with another 75 bps hike expected. Given the tone of this survey, I don't expect the BOC to hint at a pause yet. Though they're likely to slow to 50 bps as housing market concerns flare.

Selected charts:

BOC supply chain bottlenecks
inflation above target
output prices
output prices