Small businesses expect fresh record wage and price gains over the next year, according to a Canadian Federation of Independent Business survey published Thursday, a concern for the Bank of Canada that says inflation expectations are key in determining whether to hike interest rates by perhaps 50bps or even more at its next meeting on June 1.
Firms are planning 4.9% price increases over the 12 months starting in April, beating the prior record of 4.7% set in the previous report. That measure has climbed from 3.1% a year ago. Expected wage increases climbed to 3.2% from 3%, the highest in CFIB data back to 2009.
Wage and price readings exceed the BoC's 1% to 3% band around its 2% inflation target. Supply chains will remain tight into at least the second half of the year, a top trade economist has told MNI.