The Bank of Canada expects inflation to push past 8% next week when June’s data is released, with the rate expected to hover around that figure for a few more months, according to bank governor Tiff Macklem.
Macklem made the claim when speaking to the Canadian Federation of Independent Business by webcast, stating his belief that high oil prices would drive inflation “a little over” 8%.
“Inflation is high sevens. It’s probably going to go a little over eight. We have the next CPI next week. We know oil prices were very high in June, so I wouldn’t be surprised to see it move up,” he said said.
Despite the negative short-term outlook, Macklem remained positive that inflation would fall to the bank’s 2024 target of 2%.
Analysts expect June inflation to hit 8.2% – 8.3% when the data is released on Wednesday, which would be the highest level since 1982. Inflation hit 7.7% in May, the highest since January 1983.
The bank has made aggressive moves to fight rising prices, with a shock 100 basis point rate hike implemented this week.
Deputy Prime Minister Chrystia Freeland, who also serves as Canada’s finance minister, backed the bank to see the nation through the turbulence ahead, whilst reiterating her government’s commitment to tackling the drivers of inflation and supporting households struggling with the burden.
“We are confident that the Bank of Canada has the tools and the expertise to do this job,” Freeland told reporters.