Canada: Inflation ticks down in December

Seasonally-adjusted consumer prices rose 0.2% from a month earlier in December, easing from November’s 0.5% rise. According to Statistics Canada, December’s deceleration was primarily due to a slower rise in transport prices. Meanwhile, food and shelter prices rose at a similar pace to November while household-related prices fell sharply in the month.

Inflation came in at 1.9%, down from November’s 2.1% but still comfortably within the Bank of Canada’s target range of 2.0% plus/minus 1.0 percentage point. Meanwhile, annual average inflation was stable from a month earlier, rounding out the year at 1.6%. Core inflation, which excludes volatile items including fuels and fresh produce, dipped from 1.3% to 1.2%.

Canada Inflation Forecast

The Bank of Canada expects inflation to average 2.0% in 2018 and 2.1% in 2019. FocusEconomics Consensus Forecast panelists foresee inflation averaging 1.9% in 2018, which is unchanged from last month’s forecast. For 2019, our panelists expect inflation to average 2.0%.