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BoC Box On Normalization In Firms’ Price Setting Behaviour

CANADA
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  • The MPR has a box on greater details behind firms’ price-setting behaviour, one of the Bank’s longstanding explicit areas of focus.
  • Rather than focus on a survey-based approach, they analyse the behaviour of prices of ~100k individual goods and services and calculate relative frequency of price changes.
  • “The relative frequency of price changes has declined significantly from its peak during the pandemic, nearing historical average levels (Chart 3-B). Further normalization appears possible, however. This is most evident for goods excluding food and energy, the category with the largest remaining gap relative to its historical average”
  • See Box 3 on pg 23: https://static.bankofcanada.ca/uploads/pdf/mpr-2024-04-10.pdf
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  • The MPR has a box on greater details behind firms’ price-setting behaviour, one of the Bank’s longstanding explicit areas of focus.
  • Rather than focus on a survey-based approach, they analyse the behaviour of prices of ~100k individual goods and services and calculate relative frequency of price changes.
  • “The relative frequency of price changes has declined significantly from its peak during the pandemic, nearing historical average levels (Chart 3-B). Further normalization appears possible, however. This is most evident for goods excluding food and energy, the category with the largest remaining gap relative to its historical average”
  • See Box 3 on pg 23: https://static.bankofcanada.ca/uploads/pdf/mpr-2024-04-10.pdf