Iran Conflict Fuels Spike in Canada Inflation Expectations, Central Bank Surveys Say — 2nd Update
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The Middle East conflict has sharply lifted Canadian firms' inflation expectations and triggered worries among executives about passing on higher costs to customers. Households have canceled holiday plans and postponed spending due to worries about the war's impact on the Canadian economy.
The Bank of Canada's quarterly surveys showed a sharp increase in Canadian firms' inflation expectations due to the Middle East conflict. Executives are worried about passing on higher costs to customers. Households have canceled holiday plans and postponed spending on big-ticket items. Gasoline prices in Canada rose 21% in March, a record month-over-month increase. The Bank of Canada is balancing the risk of raising interest rates prematurely with concerns about waiting too long. The central bank's next rate decision is on April 29. Companies are worried about recouping higher costs through price increases, citing weak domestic demand and elevated industry competition.
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