Pandemic-related restrictions and precautions around the world have limited production and slowed the delivery of goods. The double whammy of higher demand and impaired supply has resulted in sharply higher prices for many goods. In January, goods price inflation in Canada was 7.2%. The last time it was that high was in January 1983, when overall inflation was 8.2%.
As the pandemic recedes, we can expect consumers to shift back to spending more on services, and this should take some pressure off global demand for goods. We can also expect supply chains to normalize. But predicting how long this will take is difficult. And the war in Ukraine is compounding this difficulty, as it could also have implications for global supply chains.