Consumer price index (CPI) inflation is at its highest level since the introduction of inflation targeting in 1991, according to the new report from the Parliamentary Budget Officer (PBO).
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In his latest Inflation Watch report released on Tuesday, Yves Giroux explains that “Headline CPI inflation has exceeded the upper limit of the Bank of Canada’s 1-3% control range since April. 2021. With a rate of 6.8% recorded in April 2022, CPI inflation is now at its highest level since the introduction of inflation targets in 1991”.
The Parliamentary Budget Officer pointed out that the COVID-19 pandemic and the war in Ukraine have been unexpected but major inflationary pressures around the world.
Short term inflation only
While consumers and businesses have raised their short-term inflation forecasts, many expect longer-term inflation to remain stable.
“Financial market participants generally do not view the current high inflation environment as permanent, with CPI inflation returning to the 2% target over the medium to long term,” reads the report. The report.
Inflation can also be attributed to supply issues that certain sectors are experiencing. “This result is consistent with the view that supply or sector issues are a key driver of higher inflation. The finding of broader inflationary pressures would be more consistent with stronger global demand,” said Yves Giroux.