Canada: Inflation moderates in December
January 20, 2012
In December, consumer prices declined a seasonally adjusted 0.2% over the previous month, which contrasted the 0.1% increase witnessed in November. The monthly price change mainly reflected falling prices in the transportation category due to lower prices for passenger vehicles and slower growth in gasoline prices. Consequently, annual headline inflation moderated from 2.9% in November to 2.3% in December, which came in well below market expectations of 2.7% and marked the lowest level in 10 months. Currently, inflation remains within the Central Bank's 1.0 percentage point tolerance margin around its 2.0% target. Annual core inflation, which excludes volatile items such as gasoline and fresh food, followed suit and edged down from 2.1% in November to 1.9% in December. In 2011, inflation averaged 2.9%, which was up from the 1.8% seen in 2010. The Bank of Canada expects headline inflation to average 1.8% in 2012 and 1.9% in 2013.