Hey there, savvy readers! We've got some hot-off-the-press insights from an October 4, 2023 article in Canadian Mortgage Trends magazine about the ongoing inflation rollercoaster 🎢. Strap in and let's break it down!

The Bank of Canada (BoC) is dishing the details on what's been causing those pesky price hikes 🔥. According to BoC Deputy Governor Nicolas Vincent, businesses have been cranking up their prices more frequently and with larger jumps, and it's got inflation higher than they'd like 📈.

Vincent spilled the beans during his recent speech on pricing practices and monetary policy. He pointed out that businesses have been shaking things up in the price-setting department, especially since the pandemic hit. 🦠

He mentioned, "Price increases were larger than normal during this period, driven by the higher costs that firms were facing and helped along by strong demand." 📈💼

So, what's up with the inflation numbers? After hitting a peak of 8.1% in June, it cooled down to 2.8% over the summer, only to bounce back up to 4%. Vincent said, "Inflation has proven stickier than many expected." Part of the blame goes to global supply issues and those skyrocketing commodity prices 🌐💰.

But, here's the plot twist: the way businesses set prices was an underappreciated factor. Vincent admitted that the Bank didn't fully consider this when making their predictions. In normal times, firms usually avoid frequent price changes due to various factors. But when costs rise quickly and demand is robust, we can expect them to play around more with prices. However, this shift back to normalcy has been a slow process 🐢.

The Canadian government isn't just sitting back and watching these price shenanigans. They've got their eyes on Canadian grocers for what they see as excessive profits at the expense of struggling families. Prime Minister Justin Trudeau and NDP leader Jagmeet Singh have both voiced their concerns. Trudeau even gave the five largest grocery companies a task: come up with a plan to stabilize food prices by Thanksgiving 🦃.

The Retail Council of Canada chimed in, noting that any food pricing discussions should include other players in the supply chain, like processors and manufacturers.

Vincent emphasized that getting inflation back to the 2% target is crucial. He said, "When inflation is low, price changes stand out more. This forces firms to be more careful about passing cost changes through to their prices." 📉💼

So, there you have it, folks! The Bank of Canada's take on why prices have been playing hard to get in line. Let's hope the inflation rollercoaster takes a chill pill soon! 🤞💸

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