Soaring raw materials costs, combined with other challenges, are leaving manufacturers with no choice but to pass on some of the additional costs to consumers, says the Canadian Manufacturers & Exporters (CME), and this is one of the factors driving high consumer price inflation.
CME has released an infographic showing the impact on manufacturers of the sustained high costs for key raw materials, such as crude oil, natural gas, wheat, and forestry products. CME also points out the raw materials price index for May was up 37.4 per cent from a year ago and has risen by two-thirds since January 2020.
Along with these escalating costs, manufacturers are also grappling with other significant challenges, including supply chain bottlenecks, labour and skill shortages, and heightened global uncertainty. For instance, ocean shipping costs are more than 5x higher now compared to when the pandemic began.
The 100-basis-point rate hike from the Bank of Canada is aimed at quelling the 40-year-high inflation and soaring prices.
But in tandem with the Bank of Canada’s actions, policymakers must do all they can to build a more productive economy with greater capacity to deliver goods and services to Canadians, CME says, arguing that increasing the supply-side of the economy is not only fundamental to growth, but it also helps create a more inflation-resistant economy.
“Canadian manufacturers are feeling the pain from these rapidly increasing costs and are ready to do their part in the fight against inflation. But this will take concrete steps from governments to help the industry get the workers it needs, improve the environment for business investment, and accelerate spending on critical infrastructure,” said Dennis Darby, CME President and CEO.
Added Darby, “We want to strengthen our sector and see it grow so it can continue to drive our economy, improve prosperity, and build long-term resilience against future shocks.”