BMO Financial Group

BMO Financial Group
BMO Bank of Montreal

BMO Bank of Montreal

November 17, 2011 09:00 ET

More Than Half of Canadian Businesses Have No Plans to Raise Prices in 2012-BMO Report

- Despite rising raw material costs, more than half of businesses have no plans to raise prices for customers

- Businesses in Alberta, Manitoba, and Saskatchewan most likely to keep prices the same, while those in British Columbia more likely to raise prices in 2012

- 79 per cent of business owners also plan to invest the same or more in their businesses next year

TORONTO, ONTARIO--(Marketwire - Nov. 17, 2011) - Despite rising raw material costs, 57 per cent of Canadian businesses have no plans to raise prices next year, and over three quarters plan to invest the same amount or more in their businesses next year, according to a new report from BMO Bank of Montreal.

"Current modest economic and wage growth, and the lure of cross-border deals have convinced many Canadian businesses not to raise prices," said Sal Guatieri, Senior Economist, BMO Capital Markets. "Staying competitive is the name of the game, and will help Canadian businesses in the long run."

Mr. Guatieri noted that with a slower economic growth rate for Canada of 2.0 per cent in 2012, price pressures will be contained. "The inflation rate will likely fall from 2.9 per cent this year to 2.1 per cent in 2012, supporting the spending power of households."

"In this environment of global economic uncertainty, it's more important than ever for business owners to enhance their resiliency through both investing in their companies to improve productivity as well as exploring new market opportunities," said Cathy Pin, Vice-President, BMO Commercial Banking. "These business surveys continue to show that Canadian entrepreneurs remain cautiously optimistic, and that they are looking for advice and solutions that will help them upgrade their infrastructure, retool their business processes, and allow them to connect with new customers and open new markets."

The survey conducted by Leger Marketing found that Canadian businesses have taken a number of steps to improve their business performance during 2011. While 15 per cent say that lower interest rates have had the most positive impact on their business, 21 per cent point to productivity improvements such as upgrading equipment and processes, and one in four say lowering expenses/costs have had the most positive effect on their business this year.

Looking to the year ahead, more than three quarters (79 per cent) of Canadian business owners also plan to invest the same amount or more into their business in 2012. Seventy-five per cent of those that plan to invest more in their businesses in 2012 say they will invest up to 25 per cent more.

The top areas in which businesses say they will invest more in 2012 include:

  • Upgrading/purchasing new equipment – 66 per cent
  • Hiring new employees – 39 per cent
  • Training employees – 31 per cent

The survey was completed between August 30 and September 16, 2011, with a sample of 509 small, medium and large business owners in Canada. A probability sample of the same size would yield a margin of error of ±4.4 per cent, 19 times out of 20.

More 34% 43% 27% 33% 39% 29% 32%
Less 4% 4% 2% - 5% 6% -
The same 57% 47% 64% 67% 51% 61% 64%

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