Canada Inflation


Canada: Inflation stabilizes in August

September 19, 2014

In August, consumer prices rose a seasonally-adjusted 0.1% over the previous month, contrasting the 0.1% drop recorded in July. According to Statistics Canada, the overall price increase was driven mainly by an increase in prices of household operations, furnishings and equipment as well as a rise in prices for alcoholic beverages and tobacco products. Conversely, the index for clothing and footwear declined in August.

Annual headline inflation in August remained constant at July’s 2.1%, which was in line with market expectations. Inflation is still well anchored within the Central Bank’s tolerance margin of plus/minus 1.0 percentage points around its target of 2.0%. Annual average inflation continued on an upward trend and rose from July’s 1.5% to 1.6% in August, which represented a 21-month high. Core annual inflation, which excludes volatile items such as gasoline and fresh food, jumped up to 2.1% in August from July’s 1.7%, which was the largest increase since April 2012.

According to its July Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.6% in 2014 and 1.7% in 2015. FocusEconomics Consensus Forecast panelists expect inflation to average 1.9% in 2014, which is unchanged from the previous month’s forecast. The panel expects inflation to average 2.0% in 2015.

Author: Angela Bouzanis, Senior Economist

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Canada Inflation Chart

Canada Inflation August 2014

Note: Year-on-year and month-on-month variation of seasonally adjusted consumer price index in %.
Source: Statistics Canada (SC).

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