TD is forecasting the annual inflation rate was 4.0% in April. The commercial bank also expects food inflation, which has strained people’s finances considerably, eased last month
Canadians’ wages are finally growing faster than prices as inflation continues to ease, but that isn’t necessarily good news for economists who worry high wage growth might stand in the way of bringing inflation back down to the two per cent target.inflationA combination of easing global pressures and higher interest rates have brought inflation down significantly since last summer in both Canada and the U.S. Here in Canada, the inflation rate has been nearly halved, slowing from a peak of 8.
Its key interest rate sits at 4.5 per cent – the highest it’s been since 2007. Higher borrowing costs caused by the rate hikes are expected to nearly halt economic growth this year. The strength in the labour market is partly explained by strong population growth in the country that’s adding to the number of workers available to firms. Meanwhile, vacancies have eased from last summer as firms report fewer labour shortages.
A key element of the central bank’s worries is how the tight labour market is affecting wages. After lagging inflation for much of the run-up in prices, wage growth has now surpassed inflation, rising 5.2 per cent in April from a year ago.TD’s director of economics, James Orlando, says wages are now playing catch-up as workers seek compensation for inflation.
Orlando says unionized workers usually see their wages adjust after private sector workers, which means wages may continue to rise rapidly as more collective agreements are negotiated.
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