Bank of Canada sees labor shortages, inflation forecast

A sign advertising available jobs at the Clocktower Brew Pub hangs in a window in Ottawa, Ontario, Canada, November 9, 2017. REUTERS Chris Wattie OTTAWA, Jan 17, Reuters -- Canadian firms see labor shortages intensifying and wage pressure increasing, with strong demand growth and supply chain constraints putting upward pressure on prices, a regular Bank of Canada survey said on Monday.

The Business Outlook Survey Indicator was at its highest level in the fourth quarter of the central bank, which was conducted before the Omicron coronaviruses variant began to spread widely.

The survey said that the combination of strong demand and bottlenecks in supply is expected to put upward pressure on prices over the next year.

As a result of capacity pressures, most businesses in sectors and regions plan to increase investment and raise wages to compete for workers and retain staff. Inflation expectations for the next two years continued to increase, with two-thirds of firms now expecting inflation to be above the central bank's 1 -- 3% control range over the next two years.