Inflation is cooling, why prices are not going down

Food prices. Image credit: mage: FAO/ Giuseppe Bizzarri

With the annual rate at seven percent in August, down from the four-decade high since June as reported by Statistics Canada this week the pace of inflation is cooling.

But in spite of the cooling of inflation, prices are not coming down. coming down. BMO’s senior economist Benjamin Reitzes was reported to say that price increases will be slower rather than prices will be falling and added consumers shouldn’t expect a lowering of inflation to a more moderate pace with other goods and services.

Overall slowing of inflation is mostly being dragged down by a lower global oil price.

As higher interest rates increase borrowing costs, some of the biggest and earliest drivers of inflation are coming back down to earth.

With the rise of food prices to 9.8 percent in the year up to August, it is expected by economists that the Bank of Canada will push ahead with its plan to hike interest rates even further.

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