Canada: Inflation falls to 15-month low in January
Consumer prices fell a seasonally-adjusted 0.1% from a month earlier in January, contrasting December’s 0.2% increase. According to Statistics Canada, the fall was mostly driven by a decrease in transportation, which was partially offset by an increase in shelter and alcoholic beverages, tobacco products and recreational cannabis prices in January.
Inflation plunged to 1.4% in January, from 2.0% in December, marking a 15-month low. The reading was bang on with market analysts’ expectations and landed below the midpoint of the Central Bank’s target range of 1.0% to 3.0%. Meanwhile, annual average inflation ticked down to 2.2% in January from 2.3% in December. Core inflation, which excludes volatile items including fuels and fresh produce, inched down to 1.5% from 1.7% in December.
Commenting on January’s inflation report, James Marple, senior economist at TD Economics, noted:
“The Bank of Canada is maintaining a bias to further tightening, but with limited inflation and slowing growth there is little urgency on this front. Indeed, much like their counterpart stateside, the benign inflation environment may lead policymakers to question whether further rate hikes are even necessary or whether the current policy setting is the fabled goldilocks “just right”.”