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When inflation is high, key commodities such as gold, oil and copper have often proved a safe haven, while Canadian stocks have outperformed their U.S. counterparts, says National Bank Financial (NBF) in a new report.

Amid persistently strong price pressures, a growing push to combat greenhouse gas emissions, and ongoing supply-chain issues, the risk of global stagflation is on the rise, NBF warns.

The firm currently estimates there’s a 30% chance of the global economy suffering a bout of stagflation in the months ahead.

According to its research, during past periods of strong inflation, both commodities and real estate have generally provided positive real returns, NBF said.

“As for equities, we find that the S&P/TSX provides a much better hedge against inflation than the S&P 500,” it said.

NBF reported that the S&P/TSX has produced an average annualized return of 2.3% during periods of at least 4% inflation, while the S&P 500 was down by an average of 5.9% annually during these same periods.

In particular, Canada’s energy sector is likely to benefit as electricity and oil prices are both rising amid supply shortages, hydroelectric outages and escalating prices for carbon emissions, the report noted.