If you think inflation is bad now, hang onto your hat.
That prediction comes from Peter Andersen who prepares a monthly economic bulletin for CEOs and executives who belong to TEC Canada. He says the traditional inflation measures such as Consumer Price Index look at things at the end of the supply chain.
He points to another metric – the industrial product price index – which tracks things at the beginning of the supply chain, in factories and so on. He says they have seen increases approaching 40 per cent here and that is before mark-ups, taxes and so on.
In other words, there is still a lot of inflation in the pipeline that has yet to reach consumers.
This will trigger more interest rate increases, which will raise the cost of borrowing on top of consumer prices and could even trigger a recession. While more likely in the U.S. than in Canada, based on the numbers economists look at, Andersen says be wary of herd mentality — just because a lot of people believe it might not occur. He thinks the possibility is now 50-50.
