Canada Inflation May 2017


Canada: Inflation edges down in May

June 23, 2017

Seasonally-adjusted consumer prices fell 0.2% in May from a month earlier, contrasting April’s revised 0.4% rise (previously reported: +0.5% seasonally adjusted month-on-month). According to Statistics Canada, prices fell in half of the eight major subcomponents of the index. In May, the transportation subcomponent recorded the largest monthly decrease, while food prices climbed more moderately from a month earlier. Meanwhile, clothing and footwear posted the sharpest monthly increase.

Inflation dipped to 1.3% in May from 1.6% in the previous two months, once again below the midpoint of the Bank of Canada’s target range of 2.0% plus/minus 1.0 percentage point—territory it occupied for much of 2016. Meanwhile, annual average inflation was also stable for a fourth consecutive month in May at 1.5%. Core inflation, which excludes volatile items including gasoline and fresh food, fell to 0.9% in May from 1.1% in April.

In its April monetary policy report, the Bank of Canada revised its inflation expectations upward to 1.9% in 2017 and 2.0% in 2018. FocusEconomics Consensus Forecast panelists also expect inflation to average 1.9% in 2017, which is down 0.1 percentage points from last month’s forecast. In 2018, our panelists also expect inflation to average 2.0%.

Author:, Economist

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