Canada: Inflation edges up in May
June 21, 2013
In May, consumer prices inched up a seasonally adjusted 0.1% over the previous month, which contrasted the 0.4% decline recorded in April. According to Statistics Canada, the monthly price increase mainly reflected higher prices for alcoholic beverages and tobacco.
As a result of the monthly increase, annual headline inflation ticked up from 0.4% in April to 0.7% in May, undershooting market expectations of a 0.9% rate. Currently, inflation remains below the Central Bank's target of 2.0% with a tolerance margin of plus/minus 1.0 percentage points. Meanwhile, annual average inflation remained stable at 1.0% in May.
Simultaneously, core inflation, which excludes volatile items such as gasoline and fresh food, remained unchanged at 1.1% in May.
According to its April Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.2% in 2013 and 1.8% in 2014. FocusEconomics Consensus Forecast panellists expect inflation to average 1.4% in 2013, which is down 0.1 percentage points from the previous month's forecast. For 2014, the panel expects inflation to average 1.9%.