Canada: Inflation rises to highest level since June 2012
February 21, 2014
In January, consumer prices increased a seasonally-adjusted 0.2% over the previous month, which matched the result recorded in both of the prior two months. According to Statistics Canada, the increase reflected higher prices in seven of the eight categories measured, with shelter and transportation registering the largest gains.
Annual headline inflation picked up from 1.2% in December to 1.5% in January. The print was above market expectations of an increase to 1.3% and marked the highest level since June 2012. Inflation remains within the Central Bank's tolerance margin of plus/minus 1.0 percentage points around its target of 2.0%. Meanwhile, annual average inflation ticked up from 0.9% in December to 1.0% in January. Core annual inflation, which excludes volatile items such as gasoline and fresh food, inched up from 1.3% in December to 1.4%.
According to its January Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.3% in 2014 and 1.9% in 2015. FocusEconomics Consensus Forecast panelists expect inflation to average 1.6% in 2014, which is unchanged from the previous month's forecast. The panel expects inflation to average 1.9% in 2015.
Author: Carl Kelly, Economist