Even with inflation down significantly from last summer’s highs, a majority of Canadian businesses are still concerned about rising prices.
According to Statistics Canada’s latest survey on business conditions, conducted in July and early August, more than half of businesses (56.6%) expected rising inflation to be an obstacle in the next three months.
The concern was highest among businesses in accommodation and food services (74.7%), health care and social assistance (64.4%), and mining, quarrying, and oil and gas extraction (63.2%).
“Nearly half of businesses expected their operating expenses to increase over the next three months,” Statistics Canada said. “Additionally, one-third of businesses expected their profitability to decrease, and just over one-quarter expected to increase the prices they charge.”
More than two in five businesses (44.7%) cited rising input costs — such as labour, capital, energy and raw materials — as an obstacle, with accommodation and food services once again most acutely concerned.
Inflation tumbled to 2.8% in June, falling within the Bank of Canada’s target range of 1%–3% for the first time since March 2021, but bounced back up to 3.3% in July.
Business optimism declined from the previous quarter’s survey, with two-thirds of businesses (66.3%) saying they were very optimistic or somewhat optimistic about the next 12 months, down from 73.5% the previous quarter.
Only about one-quarter (25.9%) of businesses expected to raise prices over the next three months, slightly fewer than 28.3% in the previous survey.
More than half (52.9%) of businesses expected profitability to remain relatively unchanged over the next three months.