In early 2023, the Bank of Canada faced intense scrutiny over its monetary policy path. While some analysts argued that the central bank’s aggressive rate hikes would trigger a severe recession, others maintained that such measures were necessary to return inflation to its target control range of 1% to 3%.
Throughout the year, persistent service-sector wage growth and rising rental costs sustained upward pressure on consumer prices. Between September 2022 and September 2023, Canada's Consumer Price Index (CPI) rose from 125.0 to 133.5. This elevated rate of price growth fueled expectations that the policy rate would remain higher for longer.
Concurrently, provincial and federal debt dynamics shifted, with public debt reaching 68% of GDP. Policy makers sought to consolidate fiscal deficits without undermining infrastructure investments essential for long-term productivity.
Using information from the stimulus material, calculate Canada's 12-month inflation rate in September 2023.
