Canada’s inflation might reach 7.3%, highest since 1983

• Bank of Canada is expected to raise interest rates by 75 basis points at its next meeting.
• Annual price increases reached a 30-year high of 6.8 percent in April, up from 6.5 percent in March.
• it is now at 1.5 percent following three consecutive increases.

Canada inflation rate has likely reached its highest point in in 40 years. As per a Bloomberg survey of economists,

Next week, Statistics Canada is scheduled to release statistics indicating that the consumer price index grew 7.3% year-over-year in May. That would be the fastest annual growth rate since 1983, and it would all but guarantee that the Bank of Canada will raise interest rates by 75 basis points at its next meeting.

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In accordance with a change in methodology announced earlier this week, Wednesday’s report will include used car prices for the first time and give fuel a greater weight in the basket of goods and services. In April, annual price increases reached a 30-year high of 6.8 percent.

The Bank of Canada has cautioned that inflation will rise in the near future, and estimates have been revised upwards consistently during the past year. The bank sees persistent pressures persisting and has warned that its policy interest rate would likely go toward the higher end of the neutral range of 2% to 3%. Having remained at a pandemic emergency low of 0.25 percent until March, it is now at 1.5 percent following three consecutive increases.

A three-quarter-point increase at the July 13 decision is priced in by markets at almost 80 percent. Numerous economists now anticipate that the Bank of Canada will follow the Federal Reserve’s lead and initiate a massive increase in borrowing costs.

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Despite the fact that Canada’s six top commercial banks have responded to Bloomberg’s inflation poll, the results are not yet official. As of Friday 4:30 p.m. in Ottawa, 15 economists have submitted their forecasts. Additional responses may be submitted, which may alter the median estimate.