Canada: Inflation moderates in August
September 21, 2012
In August, consumer prices rose a seasonally adjusted 0.4% over the previous month, which contrasted the 0.1% decline recorded in July. According to Statistics Canada, prices increased in every major category of the index except clothing and footwear as well as household operations, furnishings and equipment. Despite the monthly increase, annual headline inflation inched down from 1.3% in July to 1.2% in August, undershooting market expectations of a 1.3% increase. Currently, Canada's inflation remains within the Central Bank's target of 2.0% with a tolerance margin of plus/minus 1.0 percentage points. Meanwhile, annual average inflation moderated from 2.3% in July to 2.1% in August. Simultaneously, core inflation, which excludes volatile items such as gasoline and fresh food, inched down from 1.7% in July to 1.6% in August. The Bank of Canada expects headline inflation to average 1.7% in 2012 and 1.8% in 2013.