We’ve had a number of questions from clients about inflation over the next year and whether higher commodity prices will push inflation higher. That concern is fair; energy, metals, and many industrial commodities are all up – and higher input costs are, by definition, inflationary. The chart below illustrates this relationship, highlighting how the last copper rally was closely followed by an uptick in inflation.

At the same time, the artificial intelligence boom is exerting a deflationary influence. AI is driving efficiency, lowering costs, and allowing companies to do more with less.

Ironically, that same AI boom is also a significant driver behind rising commodity prices. The expansion of data centers, power generation, and infrastructure requires enormous amounts of energy and raw materials, thereby increasing demand for commodities.

The market is now watching a true tug-of-war: commodities pushing inflation up, and AI-driven efficiency pushing costs down. We’ll be watching this dynamic closely, as the prevailing force may influence market trends and how portfolios are positioned in the year ahead.

Source: Statistics Canada CPI (as of Dec 31, 2025) and LSEG Copper Higrade [HG/1-NC] Monthly Close (as of Feb 11, 2026).

I have also included a piece from our CIBC Economics team entitled “The basis for our base case on trade”.

As always, if you have any questions, please feel free to give us a call at any time.

Have a great weekend.

Milan