MNI INTERVIEW: Canada Firms Boost Inflation View Above 3%-CFIB

Canadian firms are already planning for price increases faster than 3% -- the top end of the central bank's inflation target range -- just weeks after the Iran conflict boosted energy costs, the head of an influential survey told MNI.

Companies expect average prices to rise 3.2% over the next year, up from the March survey's 2.6%, according to figures Thursday from the Canadian Federation of Independent Business. It's the highest inflation view and the biggest one-month jump in price views in about a year, and similar to the rise seen after the U.S. imposed heavy tariffs on Canada.

"The April reading is mostly a reaction to stubbornly high oil prices, and especially to the risk that they may climb even further," CFIB's economics director Andreea Bourgeois told MNI. The group has more than 100,000 members and its monthly sample size is larger than the Bank of Canada's quarterly surveys.  

Business owners who set prices for customers before the conflict began will need to play catch up later on, Bourgeois said. "Once they can adjust prices, many will need to recover costs and build in enough flexibility to protect against further fuel costs increases."

CFIB's report is one of the first reads on inflation expectations since the conflict broke out in late February. Bank of Canada Governor Tiff Macklem has said he won't tolerate an energy price bump turning into stubborn inflation. The survey result is faster than Statistics Canada's report for February showing consumer prices rose 1.8% from a year earlier. 

"At this stage, the Bank of Canada is likely watching this dynamic closely," Bourgeois said. "Higher oil prices may add upward pressure on inflation, while tariffs are still weighing on economic growth."

Investors are betting the Bank will hike later this year while most economists see no change to the 2.25% policy rate in 2026. The next rate decision is April 29.

"The important question now is whether our 3.2% planned price increase indicator marks the beginning of a new upward trend," Bourgeois said.

Fuel costs are also now the top cost constraint on business growth, affecting nearly three in four firms, the CFIB found. That figure has doubled since February.