00000cam 2200000zi 4500 9.965200 CaOODSP 20260814134003 m o d f cr |n||||||||| 260814e20260702oncd ob f|0| 0 eng d CaOODSP eng rda CaOODSP n-cn--- FB3-8/2026-33E-PDF Kang, Kira, author. Supply and demand-driven inflation : decomposition and policy implications / Kira Kang, Rodrigo Sekkel, Temel Taskin, Jing Yang. [Ottawa] : Bank of Canada = Banque du Canada, July 2, 2026. ©2026 1 online resource (ii, 15 pages) : charts. text txt rdacontent computer c rdamedia online resource cr rdacarrier Staff analytical paper = Document analytique du personnel, 3110-9195 ; 2026-33 Cover title. Includes bibliographical references. "This note decomposes Canadian inflation into supply- and demand-driven components using detailed personal consumption expenditure data. We find that both supply and demand forces contributed to the post-pandemic rise in inflation, with supply-side pressures accounting for the larger share. Demand-driven inflation is more cyclical and declines during economic downturns. We then use the decomposition in two policy applications. First, contractionary monetary policy shocks lower demand-driven inflation but have little effect on supply-driven inflation. Second, estimates of a targeted Taylor rule indicate that the Bank of Canada responds more strongly to demand-driven inflation than to supply-driven inflation. The results highlight the importance of distinguishing between the sources of inflation when evaluating inflationary pressures and monetary policy"--Abstract, page ii. Inflation (Finance) Canada. Monetary policy Canada. Supply and demand. Inflation Canada. Politique monétaire Canada. Offre et demande. Bank of Canada, issuing body. Staff analytical paper (Bank of Canada) 3110-9195 ; 2026-33 (CaOODSP)9.958938 PDF 793 KB https://publications.gc.ca/collections/collection_2026/banque-bank-canada/FB3-8-2026-33-eng.pdf