(Bloomberg) — Food price inflation is expected to ease, helped in part by “reasonably good harvests” in Canada and several other countries, Bank of Canada Governor Tiff Macklem said.

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“In fact, I hope at least food inflation, which is not quite the same as food prices, will come down because in Canada, in a number of other countries , there have been reasonably good harvests,” Macklem said in an interview with federally owned CBC radio that aired on Sunday.

He also pointed to a resumption of some wheat shipments from Ukraine, a major grain exporter before the war with Russia.

Inflation began to decline as the central bank raised interest rates to 3.25%. Consumer prices rose 7% in August, a slowdown from July’s 7.6% rise.

Interest rate hikes “have started to cool parts of the economy and that’s actually what we need,” Macklem said. This is because “the demand in the economy, the spending in the economy exceeds what the economy can produce”.

The central bank governor pledged to continue on a hawkish rate path amid concerns about elevated domestic price pressures and entrenched inflation expectations.

“Companies can’t keep up, they can’t find enough workers to serve other customers,” he said. He pointed to the exceptionally high number of vacancies as a signal that “it is possible to slow down the economy, it is possible to reduce the number of vacancies without putting a lot of people out of work”.

Still, “I’m not going to pretend it’s going to be painless, some Canadians are going to be in a rush,” he added.

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