Canada: Inflation slows to a near two-year low in May
June 22, 2012
In May, consumer prices decreased a seasonally adjusted 0.2% over the previous month, which contrasted the rise of the same magnitude observed in April. The monthly price decrease mainly reflected lower prices for transportation as well as for clothing and footwear. As a result of the monthly decline, annual headline inflation fell from 2.0% in April to 1.2% in May, which came in below market expectations of a 1.5% increase and represented the lowest rate of inflation since June 2011. Currently, Canada's inflation remains within the Central Bank's target of 2.0% with a tolerance margin of +/- 1.0 percentage points. Meanwhile, annual average inflation edged down from 2.7% in April to 2.5% in May. Simultaneously, core inflation, which excludes volatile items such as gasoline and fresh food, fell from 2.1% in April to 1.8% in May. The Bank of Canada expects headline inflation to average 2.2% in 2012 and 2.0% in 2013.