(Bloomberg) -- Food price inflation is set to slow, helped in part by “reasonably good harvests” in Canada and several other countries, Bank of Canada Governor Tiff Macklem said.
“I am actually hopeful that at least food inflation, which is not quite the same thing as food prices, is going to come down because in Canada in a number of other countries there have been reasonably good harvests,” Macklem said in an interview with federal government-owned CBC Radio broadcast Sunday.
He also pointed to a resumption of some wheat shipments out of Ukraine, a major exporter of the grain before the war with Russia.
Inflation has started easing as the central bank lifted interest rates to 3.25%. Consumer prices climbed 7% in August, slowing from the 7.6% increase in July.
Interest rate increases “have started to cool parts of the economy and actually that’s what we need,” said Macklem. That’s because “demand in the economy, spending in the economy is running ahead of what the economy can produce.”
The central bank governor has vowed to continue on a hawkish rate path because of worries about elevated domestic price pressures and inflation expectations becoming entrenched.
“Businesses can’t keep up, they can’t find enough workers to serve other clients,” he said. He pointed to the exceptionally high number of vacant jobs as a signal that “there is scope to slow the economy, there is scope to reduce the number of vacancies without a lot of people being put out of work.”
Still, “I am not going to pretend that it is going to be painless, some Canadian are going to be squeezed,” he added.
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