Bank of Canada Surveys Highlight War's Cost Pressures

OTTAWA Canadian businesses showed signs of optimism in early 2026 before the outbreak of war in the Middle East, but follow-up surveys indicate they are now grappling with rising costs tied to the conflict, according to the Bank of Canada.

The central bank's business outlook survey, conducted from February 5 to 25 with about 100 firms across the country, captured expectations of stronger sales growth and investment intentions for the first quarter. That assessment predated the U.S. and Israeli attacks on Iran, which sparked the conflict. In March follow-up calls with 20 firms identified as particularly vulnerable to the war's effects, however, many reported immediate cost pressures from higher prices for energy, fertilizers and freight. Others anticipated further increases as suppliers passed on expenses. The bank noted that these developments prompted significant shifts in outlooks, with most sampled businesses revising upward their forecasts for input prices, including fuel, freight, fertilizers and exchange rates.

While expectations for higher input costs were widespread, fewer firms planned to raise their own selling prices. The ability to pass on increases varied by sector;...