MNI: Canada Firms Keep Inflation View Above 3%-CFIB

Canadian firms plan price increases faster than 3% -- the top end of the central bank's inflation target range -- for the second month since the Iran war broke out while confidence in the overall outlook fell to the lowest in a year, the Canadian Federation of Independent Business said Thursday.

Companies expect average prices to rise 3.1% over the next year following readings of 3.2% in April and 2.6% in March, it said. The group's barometer of confidence over the next year fell to 46.3 from 58, the biggest drop since U.S. tariffs took hold early last year. 

"Main factors for the loss of confidence: persistently higher fuel cost concerns, constant weak demand, and expectations for prices to go up," CFIB's economics director Andreea Bourgeois wrote in a report. The group has more than 100,000 members and its monthly sample size is larger than Bank of Canada quarterly surveys.  

BOC Governor Tiff Macklem has said he won't tolerate an energy price bump turning into stubborn inflation. Statistics Canada's latest report showed inflation quickened to 2.8% in April from 2.4% in March while core measures were the slowest since the pandemic. 

Investors are betting the Bank will hike later this year while most economists see no change to the 2.25% policy rate in 2026 because of weak growth. The next rate decision is June 10. (See: MNI INTERVIEW: BOC Holds With Broader US Tariff-Senator Gignac)