Iran war boosts inflation expectations and weakens business confidence, Bank of Canada says

The Bank of Canada says the Iran war has weighed on business confidence and pushed inflation expectations higher, according to its latest business outlook surveys released Monday. The central bank said geopolitical uncertainty and higher input costs have hurt sales expectations for many firms, while the share of businesses expecting a recession over the next year rose to 17 per cent in the second quarter from 9 per cent in the previous quarter. The surveys also showed that inflation concerns increased as energy prices rose during the Middle East conflict. In response, the Bank of Canada said it is separating some of its survey indicators to better track business expectations for sales, hiring and investment, as well as prices, wages and inflation. The report noted that later followup surveys suggested inflation worries eased after a midJune peace deal. A separate consumer survey found households were also more cautious, with many saying they expect higher prices and planning to spend less on major purchases.