Inflation is on the rise, but at a slower pace. According to Statistics Canada, the consumer price index (CPI) increased 4.3% on a year-over-year basis in March 2023—the smallest rise since August 2021. But it shouldn’t be a surprise that many businesses are experiencing much larger cost increases.
There are many reasons for the recent rise in inflation: higher mortgage interest rates, an increase in grocery prices, and the rising cost of household goods. Gasoline prices have declined, but they were unusually high last March due to Russia’s invasion of Ukraine.
Input costs are rising across the board for consumers, business, and government. For businesses in sectors where revenue hasn't yet recovered to pre-pandemic levels, profitability pressures are exacerbated.
With the Bank of Canada expected to keep interest rates higher for longer, business debt servicing costs will remain high—putting a further strain on cash flows. Rates at elevated levels will make operating your business and borrowing to invest in growth costly, impacting expansion and M&A activities.