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Some Limited Progress In Cooling Firms’ Inflation Expectations

CANADA
  • The Business Outlook Survey for Q3 shows firms’ inflation expectation ease from elevated levels: 1Y ahead down from 4.95 to 4.69%, 2Y ahead from 3.13 to 2.88%, 5Y ahead from 2.54 to 2.42%.
  • Inflation: Firms expecting inflation above 3% over next two years: 77% from Q2 high of 78%
  • Bottlenecks: No further improvement for supply chain (holding at 43% vs Q1 high of 43.6), minimal improvement in labour (62 from Q2 high 63%)
  • Wages: Larger move here as average expected wage increase over next year falls back after sharp increase prior quarter, falling from 5.8 to 4.9% Y/Y.

Source: Bank of Canada

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