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Import prices and inflation in Canada

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  • Weimin Wang

Abstract

This article examines to what extent the current high inflation in Canada was driven by the rise in import prices, and the key factors that have driven up import prices. By decomposing final domestic demand (FDD) inflation into the contributions from its domestic and import components, this article finds that the importance of import prices to FDD inflation has been increasing since the second quarter of 2021 and reached 50% by the end of 2022. The robust demand for imports and the large depreciation of the Canadian dollar against the U.S. dollar seem to have driven up import prices. Other external factors, such as geopolitical risks, also affected import prices. This is reflected by a jump in imported energy prices. In addition, import inflation is driven more by intermediates and capital imports rather than imports of consumption goods.

Suggested Citation

  • Weimin Wang, 2023. "Import prices and inflation in Canada," Economic and Social Reports 202300600002e, Statistics Canada, Analytical Studies and Modelling Branch.
    • Handle: RePEc:stc:stcp8e:202300600002e
    DOI: https://doi.org/10.25318/36280001202300600002-eng
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    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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