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Half of businesses say rising input costs have become a serious problem, and an increasing number say they will pass on these costs to consumers, according to a new survey from Statistics Canada and the Canadian Chamber of Commerce.

The quarterly survey of 17,695 Canadian businesses, conducted from Jan. 4 to Feb. 7 and released Friday, listed rising input costs as the most widely shared problem. Fifty per cent of businesses listed it as a concern, up from 20 per cent in the third quarter of 2020. The problem was particularly acute for businesses in manufacturing (74 per cent), food services and accommodation (71 per cent) and agriculture (64 per cent). Frequently cited rising costs include labour, insurance and transportation expenses.

“Rising cost pressures for businesses are quite acute and increasing and broadening,” said Stephen Tapp, chief economist at the Canadian Chamber of Commerce.

Supply-chain disruptions continue to be a major concern for businesses. Thirty-two per cent of businesses said they had difficulty acquiring the supplies they need, a problem that was worse for the construction (58 per cent) and manufacturing (53 per cent) sectors.

Of those businesses that had experienced supply-chain difficulties, 72 per cent said it has gotten worse over the past three months.

Mr. Tapp said that, given the survey was conducted in January and early February, some of the supply-chain issues might have been worsened by the flooding in B.C. and blockades at border crossings.

However, businesses said they did not expect those issues to clear up any time soon. Twenty-three per cent said they expect the supply chain to remain an obstacle for six months to a year, 29 per cent said it would take more than a year and 33 per cent said the timeframe was unknown.

An increasing number of businesses said they plan to pass higher costs on to consumers. Thirty-six per cent said they plan to raise prices, up from 26 per cent in the previous quarter. The numbers were highest for the food services (57 per cent), manufacturing (56 per cent) and retail (52 per cent) industries.

In the case of business in sectors such as manufacturing and transportation, Mr. Tapp pointed out, those increased prices will translate into higher input costs for other businesses in the supply chain.

In general, he said, the survey suggests that inflation will remain high for a while yet. The Consumer Price Index rose 4.8 per cent on a year-over-year basis in December, the highest level in years.

The Bank of Canada is expected to start raising interest rates in March in a bid to fight inflation, which has outpaced the bank’s forecasts.

“The Bank of Canada is looking for prices to come down in the second half of the year,” Mr. Tapp said. “This could keep some more momentum on price pressures to stay elevated.”

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