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Canada Inflation December 2020

Canada: Inflation eases in December

Consumer prices rose a seasonally-adjusted 0.14% in December over the previous month, slowing down from November’s 0.29% increase. December’s result marked the softest rise in prices since August. The moderation was broad-based, with reduced price pressures recorded for housing, transportation, and food.

Inflation came in at 0.7% in December, which followed November’s 1.0%. Annual average inflation edged down to 0.7% in December (November: 0.8%). Core inflation was stable, coming in at November’s 1.5% in December.

Commenting on December’s print, Royce Mendes a senior economist at CIBC Economics, noted:

“Even if, as we expect, inflation accelerates further from here to eclipse the Bank of Canada’s 2% target in the months to come, it will be driven by these temporary and volatile factors, including gasoline prices, temporary methodologies and base effects. As a result, the Bank of Canada will continue focusing on supporting the recovery until slack has been absorbed such that inflation is sustainably running at 2%, something we don’t expect to see until 2023.”

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