Ottawa, July 13, 2022 – Today’s 100-basis-point rate hike from the Bank of Canada is aimed at quelling 40-year-high inflation and soaring prices that are profoundly affecting Canadian consumers as well as the country’s manufacturers.
A new Canadian Manufacturers & Exporters (CME) infographic shows the impact on manufacturers of the sustained high costs for key raw materials, such as crude oil, natural gas, wheat, and forestry products.
In fact, the raw materials price index for May was up 37.4 per cent from a year ago and has risen by two-thirds since January 2020.
Along with these escalating costs, manufacturers are also grappling with other significant challenges, including supply chain bottlenecks, labour and skill shortages, and heightened global uncertainty.
Combined, these challenges are weighing on margins, leaving manufacturers with no choice but to pass on some of the additional costs to consumers. This is one of the factors driving high consumer price inflation in Canada.
Higher interest rates curb inflation by reducing demand for goods and services and slowing the economy down.
But in tandem with the Bank of Canada’s actions, policymakers must do all they can to build a more productive economy with greater capacity to deliver goods and services to Canadians.
Increasing the supply-side of the economy is not only fundamental to growth, but it also helps create a more inflation-resistant economy.
“Canadian manufacturers are feeling the pain from these rapidly increasing costs and are ready to do their part in the fight against inflation. But this will take concrete steps from governments to help the industry get the workers it needs, improve the environment for business investment, and accelerate spending on critical infrastructure,” said Dennis Darby, CME President and CEO.
Added Darby, “We want to strengthen our sector and see it grow so it can continue to drive our economy, improve prosperity, and build long-term resilience against future shocks.”
- The manufacturing sector accounts for nearly 10% of Canada’s real gross domestic product.
- Manufacturers employ 1.7 million people in Canada.
- Total manufacturing sales hit a record high of $718.4 billion in 2021.