Inflation in 2022 is much higher than expected. This is due to the war in Ukraine, climate impacts on food production, and ongoing supply chain issues.
We have data for four months of 2022 and a good understanding of the immediate trends in prices. This means inflation forecasts for 2022 are more reliable now than they were in January.
Inflation forecasts for 2023 are less reliable, since they assume that prices will be dampened by a continued rise in interest rates.
In April 2022, the Bank of Canada raised interest rates to 1%, and to 1.5% in June 2022 Many forecasters expect the Bank of Canada to increase rates to 1.75% by September.