Could Inflation’s Surge Lead to Stagflation?
Inflation has surged in Canada after remaining largely dormant since the end of the 2008–09 global recession. In 2020, the COVID-19 pandemic struck, causing demand in the Canadian economy to collapse and holding the increase in consumer prices. However, a combination of factors, including the reopening of the economy, base effects, supply chain disruptions, soaring oil prices, and widespread shortages of semiconductors and other key products, has caused consumer prices to expand at a 4.0 to 5.0 per cent pace since the spring of 2021—well above the Bank of Canada’s upper target range.
Issue briefing | 16-min read
March 25, 2022