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Canada Inflation December 2019

Canada: Inflation stable in December

Consumer prices increased 0.4% on a seasonally-adjusted basis from a month earlier in December, stronger than November’s 0.1% uptick. According to Statistics Canada, higher prices for transportation, food and housing drove the increase in December.

Inflation was stable at 2.2% in December, the joint-highest in six months and likely due to higher gasoline prices at the pump over the holiday season. December’s reading met market analysts’ expectations and remained above of the 2.0% midpoint of the Central Bank’s target range of 1.0% to 3.0%. Meanwhile, annual average inflation was also steady at 1.9% in December.

Commenting on December’s print, Brian DePratto, a senior economist at TD Economics, noted:

“It was steady as she goes for consumer price growth in December as energy prices masked a more modest month of yearly price gains […] We continue to look for a slight moderation in the pace of headline inflation as year-ago energy price comparisons normalize, but expect price gains to remain around the 2% mark.”

This year, inflation should be supported by robust wage growth and the recently introduced carbon tax. That being said, developments in commodity prices remain a key risk to the inflation outlook.

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