Inflation in Canada could halve by the end of the year
Looks like the Canadians can take a break from their worries about money.
Experts assure that the rate of inflation will fall significantly in the very next few months.
A report from RSM Canada, a global accounting firm, predicts that the price increases recently witnessed by Canadians will slow markedly this year and that inflation could drop from 0.5 to 3 percent by the end of 2023 and continue to decline in 2024.
This 2 percent drop in inflation is important: this is the goal the Bank of Canada is pursuing by increasing the interest rate at the moment.
While economists believe that the central bank is done with rate hikes for now, the RSM predicts that things could get worse. According to their report, the rate hike will last until the middle of this year and could reach 4.75 percent.
"As inflation continues to rise, we expect the Bank of Canada to continue to raise interest rates to cool the overheated economy," the RSM chief economist said.
Although the RSM believes Canada will be able to avoid a recession, their report nonetheless predicts a significant slowdown in the economy, largely due to a decline in consumer demand.
"Those parts of the economy that are sensitive to higher interest rates, such as housing and manufacturing of goods with very high starting prices, have already begun to see the impact of higher credit costs. Although the full effect of high-interest rates will be seen over time," the report states.
"The waning consumer confidence and declining sales caused by continued inflation will result in lower GDP growth in 2023 and 2024.
