Keeping our eyes on inflation

The unique recovery has disrupted supply chains

Canada’s economy has made great progress since the pandemic began, thanks to high vaccination rates and a broad reopening. But this recovery is a highly unusual one, and a lot of uncertainty remains.

Among the key risks to the Bank’s outlook are the supply disruptions that we’ve all experienced lately. This is a global phenomenon that is also affecting Canada. Wait times are longer for everything from cars to building supplies, and some goods aren’t available at all.

Much of the disruption comes down to the fact that, throughout the pandemic, households in many countries have had less opportunity to spend on services like restaurants, live concerts or travel, so they’ve spent mainly on goods instead.

Many of the goods we buy—and parts that go into them—come from abroad, so this shift has put a great deal of pressure on supply chains.

Factors that have intensified the bottlenecks and delays include:

• businesses stocking up on inputs in a bid to avoid delays for their products
• bad weather and natural disasters such as the floods in British Columbia
• labour shortages, in part because as the global economy recovers from the pandemic, matching workers with jobs is taking time