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Small Business Inflation Expectations Struggle To Fall Below 3%

CANADA DATA
  • Further to the earlier look at the wage/labour components of the CFIB small business barometer for December, price plans are also worth focusing on.
  • Price plans held steady at an expected 3.1% increase over the next twelve months, unchanged from November.
  • It’s averaged 3.1% since August, having stalled after making good disinflationary progress from a high of 4.9% in Apr’22.
  • The BoC’s preferred core measures have recently slowed to 2.5% annualized over three months and 3.3% over six months, but if a lack of further progress is echoed in the BoC’s BOS and CSCE reports due Jan 15, it would add to BoC caution over the potential for inflation to continue its decline back to the 2% target.
  • On that note, 5Y breakevens have also recently lifted to a 2.1-2.2% range rather than 2.0-2.1% seen in recent months.

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