Experts react to Bank of Canada remarks on corporate pricing
BNN Bloomberg
As a Bank of Canada official cautions that corporate price increases are contributing to the country's sticky inflation, experts say there are alternatives to fixing the problem besides interest rate hikes.
"Jawboning business leaders to restrain price increases, and to more quickly pass on cost savings that are now visible in the food supply chain, can have an incremental impact," Stanford said. Such policy moves will be more effective when the government has more forceful measures, such as the excess profits tax contemplated by the standing committee on Agriculture and Agri-Food, in its back pocket, he added. The Bank of Canada’s mention of corporate prices highlights the fact that wage growth and a growing population aren’t the only factors to be considered when thinking about inflation, Stanford added. “It’s not wages that are driving up costs, it’s employees demanding more wages to keep up with the cost of things,” he said. SMALL BUSINESS IMPACT Unlike large corporate firms, smaller Canadian companies have only now been able to hike prices order to stay afloat, Dan Kelly, president and chief executive officer of the Canadian Federation of Independent Business (CFIB), told BNNBloomberg.ca in a phone interview. “We know these price increases are higher than the Bank of Canada would like to see, but at some point firms have to pass on costs to their customers or else they will face going out of business,” he said on Tuesday. Small business owners in particular have had held off on passing costs off to their consumers since they know it would lead to weakened demand for their products — but the lag is catching up now, Kelly added. He added that taming stubborn inflation must be a group effort from both the private and public sectors, as wage pressures coming down from the provincial government have ultimately led to business owners hiking prices. “We need to be in this fight together if we’re going to see some relief,” he added.
