When will inflation peak? Here’s what economists have to say

As inflation continues to soar, economists say Canadians will have to curb their spending and adjust for higher interest rates. In a report released this week, Statistics Canada said Canada’s year-over-year rate of inflation hit 7.7 per cent in May, the highest it has been since 1983.

As inflation continues to soar, experts say Canadians will have to ride it out for a while longer before prices come back down.

“We may not see the peak for another couple of months,” Sal Guatieri, director and senior economist at BMO Capital Markets, told CTVNews.ca. “At least in the near term, I don't think we're going to get to see much relief on the inflation front.”

In a report released this week, Statistics Canada said Canada’s year-over-year rate of inflation hit 7.7 per cent in May, the highest it has been since 1983.

One of the major reasons behind the continued inflation increases is the ongoing conflict in Ukraine and its impact on gas prices.

“We need to see energy prices, oil in particular, pulled back on a sustained basis before we get any meaningful relief,” Guatieri said. “Because energy costs don't just hurt at the pump, but they're also the key driver of input costs for basically all commodities and transportation distribution networks supply chains.”

Amy Peng, an associate professor of economics at Toronto Metropolitan University, said that another factor hiking up inflation is Canada’s longstanding ties with the United States. She said as long as inflation continues to climb in the U.S., it will also rise here because of how integrated our two countries’ economies are.

“Notice that their Federal Reserve Banks make the decision first and we follow, right?” she said. “So we always have this lag effect.”