Bank of Canada Governor Tiff Macklem says he expects inflation to cool down sometime in 2022.
During a virtual speech to the Council on Foreign Relations in Washington, D.C., Macklem said that Canadians should anticipate that elevated prices for items ranging from food to vehicles will persist through next year (2021) and into 2022 before moderating and falling to more normal levels.
"We are working through these, but it's going to take some time," Macklem said. "I do want Canadians to be confident that we certainly understand that our job is to make sure that one-off price increases don't become ongoing inflation."
Macklem added that he expects inflation to remain above the top end of the Bank of Canada's 3% target range "at least" until the end of 2021.
Canada's inflation rate climbed to 4.1% in August, the highest one-month rise since 2003, amid surging housing costs and prices for passenger vehicles and household appliances.
Macklem has previously warned against reading too much into the "temporary" move in inflation as the COVID-19 pandemic has led to a global supply chain shortage for many goods as well as pent-up demand for services as the global economy reopens.
In his latest remarks, Macklem reiterated that price increases and the implications for inflation will be "temporary." He did note the Canadian central bank has observed that medium-to-long term inflation indicators have not moved higher and that wage growth in Canada remains moderate.
"Prices have come back up. Part of that is base year effects; prices were very low a year ago. They've normalized. Part of that is related to these very unique circumstances of the pandemic," he said.
