Canadians Doubt Inflation Will Return To Pre-Pandemic Levels: Poll

A large majority of Canadians (63.5%) say they lack confidence that inflation will return to pre-pandemic levels, according to a new survey by Nanos Research Group.

Canadians also doubt that policymakers and the Bank of Canada will be able to rein inflation back to more normal levels. Only a third of people surveyed (30.6%) believe that price increases will return to pre-pandemic trends.

Canada’s inflation rate is currently running at an annualized 4.7%, the highest growth since 2003. The Bank of Canada is already preparing to raise interest rates by more than a full percentage point in 2022 to lower rising consumer prices and bring the inflation rate closer to the central bank’s 2% target.

The Bank of Canada’s next policy decision is tomorrow (December 8). Expected inflation is a major determinant of actual inflation since businesses increase prices and workers seek pay raises in part on what they anticipate prices will be in the future.

The Bank of Canada’s mandate requires it to keep inflation within its 1% to 3% control range as much as possible. Operationally, that has meant aiming for a 2% target. However, annual inflation has come in above 3% for seven straight months now.

The Nanos survey is consistent with results from the Bank of Canada’s own survey of consumer expectations, which showed short-term inflation expectations accelerating, though things look more anchored when it comes to longer-term expectations.

The Nanos poll surveyed 1,010 Canadians, with a margin of error of 3.1 percentage points, taken between November 27 and 29.