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Economic Viewpoint

Will Inflation Eventually Pick Up in Canada?

August 8, 2017
François Dupuis, Vice-President and Chief Economist • Benoit P. Durocher, Senior Economist

Low inflation has persisted for the last few years in Canada. Structural factors have contributed to weak price growth, such as excess capacity in the Canadian economy, in addition to temporary considerations. The gradual absorption of excess capacity suggests that upside pressure on prices could sharpen. However, given the delayed reaction time between inflation and changes to production capacity, it will likely be several quarters before any real upside pressure on prices can be felt. That said, other disinflationary factors, which have also been observed in most industrialized countries, may continue to be felt in the coming quarters, which would hinder anticipated growth.

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