Canada’s labour statistics for September showed that the country’s wage growth remains persistently strong. For workers, that’s a good thing. For central bankers trying to suppress inflation, it’s a headache.to win its fight against inflation? Do higher wages necessarily mean higher inflation?“There’s a tendency to describe the relationship quite mechanically,” Stephen Poloz said. “I’m just saying, hang on, there’s more than one thing in that chain of causality.
Mr. Poloz has acknowledged in the past that he is, by nature, an optimist; his position here could be a manifestation of that. The Bank of Canada itself – under the leadership of Mr. Poloz’s successor, Tiff Macklem – has said repeatedly in recent months that this pace of wage growth is “incompatible” with sustainably returning inflation to the bank’s 2-per-cent target.
“Price increases have closely mirrored cost increases,” Mr. Vincent said. “Even if profit margins haven’t increased, consumers have been left to bear the full brunt of higher prices.”
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