Canada's inflation rate could drop by half by end of year, firm predicts
A Canadian audit firm is making a prediction that could leave Canadians feeling more hopeful about their finances.
RSM Canada expects the country’s current inflation rate, which sits slightly under six per cent, to be cut in half by the end of the year, reaching about three per cent.
"We expect inflation, especially on a yearly basis, to slow down even further in the coming months,” says Tuan Nguyen, an economist with RSM.
Nguyen says that number could go down even more by 2024, reaching the Bank of Canada's target of two per cent.
"We are seeing a cooling spending demand continuing to spill over the economy," he says. "At the same time we're seeing the normalization of supply and inventory, which will help to bring goods prices down."
Senior financial planner Matt Buie believes the impact will be minimal.
"For the average person? It's not going to make a huge difference,” says Matt Buie, who works with Assante Capital.
"Really what the most important thing is for people is to control your own finances. You can't control the economy,” he says.
Both experts say the possibility of another uncontrollable financial situation is also on looming on horizon.
"There is a very high chance we're going to see a recession,” says Nguyen. “We have downgraded our recession probability in the last couple months from 75 per cent to around to 70 per cent at the moment due to the fact that we’re still seeing a very robust labour market.”
He believes it will be a mild and short recession in 2023.
"It's kind of like they've – well, they have – overstimulated the economy to keep it going," says Buie. "So, we've had a great party. Now, it's time for the hangover."
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