Cost pressures fail to match central bank worries
Those forces are expected to squeeze households through “pricier imports and/or rising costs for domestic production,” the authors said.
Yet CIBC’s read of recent data points the other way. “All told, we don’t see persuasive evidence that either import prices or domestic production costs are destined to accelerate or that cost increases have yet to filter through,” the report said.
On imports, CIBC said the share of finished consumer goods coming from the US is relatively modest, outside of autos and some food products, limiting the impact of US tariffs on Canadian inflation.
While the Bank feared foreign producers would lift prices to offset US tariff pain, “from our vantage point, and what we’re seeing thus far, the reverse seems more likely,” the report said.
“If, for example, a Korean carmaker can only pass on half of the 15% U.S. tariff to its American customers, and therefore absorbed a 7.5% net price cut, it would still net a better year‑on‑year price change in Canada if it cut its price to this market by, say, 5%,” the economists said.