Persistently high inflation makes businesses less competitive: BoC's Beaudry

Bank of Canada deputy governor Paul Beaudry says returning inflation to the central bank's two per cent target is critical because high and volatile inflation makes the economy inefficient and businesses less competitive.

In a speech at the University of Alberta on Thursday, the deputy governor says low and stable inflation go together, noting data shows inflation becomes more volatile the higher it is.

Canada's inflation rate was 6.3 per cent in December compared with a year earlier as it continues to decline from a peak of 8.1 per cent set in June. Next week, Statistics Canada is set to release January's inflation data.

In addition to making future financial planning harder for people and businesses, Beaudry says volatile inflation “makes it hard to judge whether a higher price represents a true change in costs or something else.”