OTTAWA, June 25 (Reuters) – The Bank of Canada’s consultation on its monetary policy framework review found broad support for its 2% inflation target, but \u200bparticipants complained about the disconnect between official inflation data and actual \u200cprice of goods, the bank said in a report on Thursday.<\/p>\n
The cost of living crisis is a challenge for Prime Minister Mark Carney who pledged to tackle affordability after his \u200bparty won a parliamentary majority in April.<\/p>\n
“Canadians in all communities the \u200bBank visited expressed concern with the cost of living,” the \u2060bank said in the report.<\/p>\n
“Many indicated that the consumer price index (CPI) did \u200bnot align with their experience or with what they see when they shop,” \u200bit said,
The disconnect between official inflation data and daily experiences led to diminished trust in the CPI number, and, by extension, in the central bank, the report said.<\/p>\n
Canada’s annual \u200binflation rate in May accelerated to 3.2%, the first time in nearly \u200btwo and a half years that headline inflation moved outside the BoC’s 1%-3% target range \u200cas \u2060the impact of higher crude oil prices due to the Iran conflict continued to filter through to gasoline costs.<\/p>\n
Governor Tiff Macklem said earlier this week that while food prices were a concern, the current spike in inflation was \u200blargely concentrated in gasoline \u200bcosts.<\/p>\n
The central \u2060bank and the finance ministry jointly review the target every five years and formally announce a decision, with the \u200bnext review set for this year.<\/p>\n
Young Canadians who participated in \u200bthe consultations \u2060said they have largely abandoned hope of ever owning a home. They dismissed the central bank’s explanation that housing affordability falls beyond its mandate, the bank \u2060said.<\/p>\n
While \u200bsome economists called for greater emphasis on rent \u200binflation in the BoC’s research and communication, most economists argued to keep mortgage interest costs as \u200bpart of the consumer price index.<\/p>\n
Reporting by Promit Mukherjee; Editing by Caroline Stauffer<\/p>\n
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