Inflation and prices

• The contribution of firm profits to the recent rise in inflation

  Staff Analytical Note 2023-12 Panagiotis Bouras, Christian Bustamante, Xing Guo, Jacob Short

  We measure the contribution to inflation from the growth in markups of Canadian firms. The dynamics of inflation and markups suggest that changes in markups could account for less than one-tenth of inflation in 2021. Further, they suggest that peak inflation was driven primarily by changes in the costs of firms.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Inflation and prices, Market structure and pricing JEL Code(s): D, D2, D22, D4, E, E3, E31, L, L1, L11

• Global Demand and Supply Sentiment: Evidence from Earnings Calls

  Staff Working Paper 2023-37 Temel Taskin, Franz Ulrich Ruch

  This paper quantifies global demand, supply and uncertainty shocks and compares two major global recessions: the 2008–09 Great Recession and the COVID-19 pandemic. We use two alternate approaches to decompose economic shocks: text mining techniques on earnings calls transcripts and a structural Bayesian vector autoregression model.

  Content Type(s): Staff research, Staff working papers Topic(s): Business fluctuations and cycles, Coronavirus disease (COVID-19), Econometric and statistical methods, Inflation and prices, International topics JEL Code(s): C, C1, C11, C3, C32, E, E3, E32, G, G1, G10

• What Can Earnings Calls Tell Us About the Output Gap and Inflation in Canada?

  Staff Discussion Paper 2023-13 Marc-André Gosselin, Temel Taskin

  We construct new indicators of demand and supply for the Canadian economy by using natural language processing techniques to analyze earnings calls of publicly listed firms. Our results indicate that the new indicators could help central banks identify inflationary pressures in real time.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Central bank research, Domestic demand and components, Econometric and statistical methods, Inflation and prices, Potential output JEL Code(s): C, C1, C3, E, E3, E5

• Why Consumers Disagree About Future Inflation

  Staff Discussion Paper 2023-11 Naveen Rai, Patrick Sabourin

  Since 2022, consumer inflation expectations have shifted, with a significant increase in those expecting high inflation in the coming year and a surge in those expecting deflation further in the future. Using data from the Canadian Survey of Consumer Expectations, this paper seeks to assess the factors that influence people to expect high inflation, moderate inflation or deflation.

  Content Type(s): Staff research, Staff discussion papers Topic(s): Inflation and prices JEL Code(s): C, C8, C83, D, D8, D84, E, E3, E31

• Markups and inflation during the COVID-19 pandemic

  Staff Analytical Note 2023-8 Olga Bilyk, Timothy Grieder, Mikael Khan

  We find that prices and costs for consumer-oriented firms moved roughly one-for-one during the COVID-19 pandemic. This means firms fully passed rising costs through to the prices they charged. However, our results are suggestive, given data limitations and the uncertainty associated with estimating markups.

  Content Type(s): Staff research, Staff analytical notes Topic(s): Firm dynamics, Inflation and prices JEL Code(s): D, D2, D4, E, E2, E3, L, L1

• Understanding Inflation Dynamics: The Role of Government Expenditures

  Staff Working Paper 2023-30 Chang Liu, Yinxi Xie

  We study the impact government expenditure has on inflation. We find that changes in government expenditure account for a substantial portion of inflation variations. We also find that inflation and inflation expectations respond negatively to fiscal spending shocks, reaffirming the supply-side channel through which inflation responds to fiscal expansions.

  Content Type(s): Staff research, Staff working papers Topic(s): Central bank research, Fiscal policy, Inflation and prices JEL Code(s): E, E3, E6, E62, E63
• June 8, 2023

  Economic progress report: Are we entering a new era of higher interest rates?

  Remarks Paul Beaudry Greater Victoria Chamber of Commerce Victoria, British Columbia

  Deputy Governor Paul Beaudry discusses the latest interest rate decision and suggests reasons why longer-term interest rates could remain higher than they were before the pandemic.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Expectations, Housing, Inflation and prices, Inflation targets, Interest rates, Labour markets, Monetary policy, Monetary policy transmission, Price stability, Recent economic and financial developments, Service sector
• June 8, 2023

  Adjusting to higher interest rates

  Speech summary Paul Beaudry Greater Victoria Chamber of Commerce Victoria, British Columbia

  Speaking a day after we raised interest rates, Deputy Governor Paul Beaudry talks about what Governing Council considered in its decision. He also suggests reasons why long-term interest rates could remain higher than they were before the COVID-19 pandemic.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Central bank research, Coronavirus disease (COVID-19), Domestic demand and components, Expectations, Housing, Inflation and prices, Inflation targets, Interest rates, Labour markets, Monetary policy, Monetary policy transmission, Price stability, Recent economic and financial developments, Service sector
• May 4, 2023

  Getting inflation back to 2%

  Speech summary Tiff Macklem Toronto Region Board of Trade Toronto, Ontario

  Governor Tiff Macklem explains that higher interest rates are working to slow inflation but warns that getting all the way back to the 2% target may take time. He also discusses the recent stress in the global banking sector and how financial stability and price stability work together.

  Content Type(s): Press, Speeches and appearances, Speech summaries Topic(s): Expectations, Financial institutions, Financial stability, Financial system regulation and policies, Inflation and prices, Inflation targets, International financial markets, Monetary policy, Price stability, Service sector
• May 4, 2023

  Staying the course to price stability

  Remarks Tiff Macklem Toronto Region Board of Trade Toronto, Ontario

  Governor Tiff Macklem explains how monetary policy is working to bring inflation down and outlines the challenges ahead. He also discusses recent stress in the global banking sector and how financial stability and price stability interact.

  Content Type(s): Press, Speeches and appearances, Remarks Topic(s): Expectations, Financial institutions, Financial stability, Financial system regulation and policies, Inflation and prices, Inflation targets, International financial markets, Monetary policy, Price stability, Service sector