Will a weak Canadian dollar impact inflation?
BNN Bloomberg
Weakness in the Canadian dollar is often regarded as a concern that could drive inflation, but a report by RBC Economics says it is unlikely to have the material impact on inflation that is feared.
Canada has broadened its imports beyond the U.S., which has made it less vulnerable to the rise in the American dollar, the report outlined on Wednesday. It also stated that roughly 80 per cent of consumer services in Canada are produced domestically.
“A weak Canadian dollar won’t derail inflation trends that are now heading in the right direction,” it said.
Inflation decelerated in Canada to 4.3 per cent in March on an annual basis, marking the slowest pace since 2021, according to Statistics Canada. RBC's findings showed that of the $105-billion Canadians spent on food in 2021 for example, $22-billion was imported. It also showed that while the U.S. market still remains Canada's largest trading partner, other markets — notably China, are growing their Canadian market share.
