In a recent quarterly survey conducted by the Bank of Canada, a significant discrepancy was found between Canadians' inflation perceptions and official statistics. The survey results, published on Monday, indicate that consumers perceive prices for essentials such as food, gasoline, rent, and housing to be either escalating or sustaining high levels. This perception persists despite a slowdown in food price growth indicated by the consumer price index.
Consumers' concern over the cost of living is primarily linked to the central bank's interest rate hikes and persistently high inflation expectations. These consumers anticipate these elevated interest rates will continue into the following year. Food inflation is often identified as a key driver of overall inflation perceptions, even though official data suggests otherwise.
Economists at Desjardins interpret this persistent inflation expectation as a signal that the Bank of Canada may adopt a hawkish stance in its imminent policy decision. This discrepancy between consumer sentiment and actual economic data presents a challenge for the central bank as it strives to manage inflation expectations while ensuring economic stability.
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