Canada: Inflation slips to a three-and-a-half year low in April
May 17, 2013
In April, consumer prices edged down a seasonally adjusted 0.4% over the previous month, which was below the flat reading recorded in March. According to Statistics Canada, the monthly price decrease mainly reflected lower prices for transportation as well as for food.
As a result of the monthly decrease, annual headline inflation fell from 1.0% in March to 0.4% in April, undershooting market expectations of a 0.6% rate. Moreover, the reading was the lowest observed in the past 42 months. Currently, inflation remains below the Central Bank's target of 2.0% with a tolerance margin of plus/minus 1.0 percentage points. Meanwhile, annual average inflation eased from 1.2% in March to 1.0% in April.
Simultaneously, core inflation, which excludes volatile items such as gasoline and fresh food, fell from 1.4% in March to 1.1% in April.
According to its April Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.2% in 2013 and 1.8% in 2014. FocusEconomics Consensus Forecast panellists expect inflation to average 1.5% in 2013, which is unchanged from the previous month's forecast. For 2014, the panel expects inflation to average 2.0%.