Supply and Demand-Driven inflation: Decomposition and policy implications - Latest

• Supply and Demand-Driven inflation: Decomposition and policy implications

  Staff analytical paper 2026-33 Kira Kang, Rodrigo Sekkel, Temel Taskin, Jing Yang

  This note uses detailed expenditure data to decompose Canadian inflation into supply- and demand-driven components. The analysis sheds light on the drivers of post-pandemic inflation and shows that monetary policy primarily affects and responds to demand-driven inflation.

  Content Type(s): Staff research, Staff analytical paper JEL Code(s): E, E3, E31, E5, E52, E58 Research Theme(s): Models and tools, Econometric, statistical and computational methods, Monetary policy, Inflation dynamics and pressures, Monetary policy framework and transmission