economic commentary

December 31, 2022 - Inflation Remains Elevated

Inflation remains stubbornly high, although recent data indicates that the level may have peaked and a downward trend has been established. Canadian inflation hit a post-pandemic high of 8.1% in June and then proceeded to decline modestly in the subsequent months. The annual inflation rate for November is 6.8%. In the U.S., the peak rate was 9.1% in June, with inflation now sitting at 7.1%. Despite this improving trend, inflation rates in both Canada and the U.S. remain considerably higher than the 2% target for both the Bank of Canada and the U.S. Federal Reserve. Inflation in the Eurozone did not peak until a few months later. The high point was 10.7% in October, with the most recent reading showing a rate of 10.0%. U.K. inflation hit a high of 11.1% in October before declining to 10.7% currently. Global inflation was the biggest driver of financial markets during 2022 as central banks reacted in aggressive fashion to combat the persistent trend.

 

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