Energy boom driving risk of inflation

The global economy is experiencing an energy boom, characterized by high oil prices, lots of investment in new oil production capacity and even shortages of skilled workers. This sounds like a recipe for inflation, so it is no wonder that central banks are on high alert.

Canada faces a real dilemma: as the energy sector soars, high energy costs and the associated strength in the Canadian dollar are squeezing sectors like consumer goods, autos, pulp and paper, general manufacturing and tourism. To these companies and their workers, the situation appears doubly unfair – not only do they miss out on the energy boom, but they must also accept the anti-inflation medicine, even though their situation is more disinflationary than inflationary.

London Free Press