The article discusses the recent inflation numbers released by Statistics Canada, which show that inflation remains "uncomfortably high" despite a slight decrease in the headline rate. The Bank of Canada’s governor, Tiff Macklem, had predicted that inflation would average 7.1% over the fourth quarter, and according to some economists, the latest data aligns with this prediction.
However, some experts believe that the numbers are still not good enough for the Bank of Canada. Deputy Governor Sharon Kozicki said that meaningful progress towards the target would require three-month rates of inflation to come down further and be sustained. But the latest data shows that the three-month annualized rate of change in the consumer price index, minus food and energy, was 4.3% in November, up from 4% in October.
Some economists, such as Charles St-Arnaud, chief economist at Alberta Central, believe that inflationary pressures remain broad and sticky. They argue that while moderation is happening, it’s happening too slowly given the high level of inflation. This could lead to price pressures sticking around, which would only reinforce inflation by prompting suppliers to charge more for goods and services and workers to demand higher wages.
The article concludes that the latest batch of inflation data supports Macklem’s sense that core price pressures will remain uncomfortable high, making it difficult to conclude that no more interest-rate increases will be needed to get inflation under control. The Bank of Canada is likely to continue increasing interest rates in January and potentially pause afterwards, depending on future data.
Overall, the article suggests that while there are some positive signs, inflation remains a concern for the Bank of Canada, and it’s unclear whether they have seen enough progress to stop raising interest rates yet.