Canada: Inflation edges higher in February

Consumer prices increased a seasonally-adjusted 0.3% from a month earlier in February, contrasting January’s 0.1% decline. According to Statistics Canada, the rise was mostly driven by an uptick in food, transportation and health and personal care prices.

Inflation inched up to 1.5% in February, from 1.4% in January. The reading beat analysts’ expectations of 1.4% but remained below the midpoint of the Central Bank’s target range of 1.0% to 3.0%. Meanwhile, annual average inflation was stable at January’s 2.2%. Core inflation, which excludes volatile items including fuels and fresh produce, increased to 2.0% in February from 1.9% the previous month.

Commenting on February’s inflation report, James Marple, senior economist at TD Economics, noted:

“Its [core inflation] relative stability suggests little need for a change in policy in either direction. If anything, the slight move down in the CPI-common measure reinforces the view that the Bank of Canada is likely to remain on hold (perhaps) indefinitely.”

Canada Inflation Forecast

In its January monetary policy report, the Bank of Canada projected inflation averaging 1.7% in 2019 and 2.0% in 2020. FocusEconomics Consensus Forecast analysts, meanwhile, see inflation averaging 1.8% in 2019, which is unchanged from last month’s forecast. For 2020, our panelists see inflation averaging 2.0%.