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What's driving inflation in Canada? Between 2020 and 2022, business prices increased by a whopping 19 per cent in the country on average. Where did those dollars go?
CCPA senior economist David Macdonald breaks down the numbers using new data which shows that, of every dollar spent on higher prices in the last two years, 47 cents was converted into corporate profits in four industries—led by mining, oil and gas extraction. Corporate profits are eating up the vast majority of the extra inflation dollars, far-outpacing increased labour costs or other expenses.
As politicians, central banks, and technocrats work to end inflation by triggering and economic slowdown, understanding the source of increased prices is key. The data is clear—the largest driver of inflation is corporate profits.