OTTAWA — Newly released federal documents show officials at the Department of Finance warned last year that the pace of inflation could pick up speed, as the federal government and the Bank of Canada said inflationary pressures were temporary.
© Provided by The Canadian Press
A note given in the spring to the Minister of Finance, Chrystia Freeland, even mentioned “galloping inflation” in consumer prices.
At that time, inflationary pressures were building from the very low prices seen during the first wave of the COVID-19 crisis. Ministry officials meanwhile warned that there were “plausible risks of higher inflation in the medium term.”
This note was written after Statistics Canada reported in May 2021 an annual rate of inflation of 3.6%; it has since risen even more, reaching 4.7% two months ago, in November.
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This memo is one of several Department of Finance documents obtained by The Canadian Press under the Access to Information Act.
The pace of inflation for the whole of 2021 is expected to be double what the Ministry of Finance predicted in its first-quarter forecast.
Stephen Tapp, chief economist for the Canadian Chamber of Commerce, says the actual inflationary shock versus forecast was the biggest he’s witnessed.
The difficulties experienced by the various supply chains in international trade have been the key to the sharp increase in inflation in 2021.
A survey whose results were released Monday by the Bank of Canada indicates that inflation is the biggest concern among Canadian consumers, who fear that it will hover at around 5% for the whole of the coming year.
Jordan Press, The Canadian Press