Canada Inflation


Canada: Inflation dips in January

February 18, 2011

In January, consumer prices added 0.3% over the previous month, following a flat result in December. The reading was exactly in line with market analyst expectations. Annual headline inflation inched down from 2.4% in December to 2.3% in January. Higher energy prices (+9.0% year-on-year) continued to be the major inflation driver, but rose at a slower pace than in December (+10.5% yoy). Furthermore, on the back of soaring global food prices, cost of food in Canada increased by 2.1% in January (December: +1.7% yoy). However, lower prices for clothing and footwear (-2.4% yoy) partially offset the upward pressure on inflation. Annual core inflation, which excludes oil and fresh food prices, inched down to 1.4% in January (December: 1.5%) and remains below the 2.0% target set by the Bank of Canada. The Bank of Canada forecasts headline inflation to average 2.1% in 2011 and 1.9% in 2012


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