Canada: Inflation holds in September
October 18, 2013
In September, consumer prices increased a seasonally-adjusted 0.2% over the previous month, which was slightly above the 0.1% increase recorded in August. According to Statistics Canada, the increase mainly reflected higher prices for alcoholic beverages and tobacco, as well as for transportation.
Annual headline inflation remained at 1.1% in September, which was in line with market expectations. Consequently, inflation remains within the Central Bank's tolerance margin of plus/minus 1.0 percentage points around the target of 2.0%. Meanwhile, annual average inflation was also unchanged, holding at the 0.9% registered in August. Core inflation, which excludes volatile items such as gasoline and fresh food, stayed at 1.3%.
According to its July Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.0% in 2013 and 1.7% in 2014. FocusEconomics Consensus Forecast panelists expect inflation to average 1.2% in 2013, which is down 0.1 percentage points from the previous month's forecast. The panel expects inflation to average 1.9% in 2014, which is unchanged from last month's estimate.
Author: Carl Kelly, Economist