Canada: Inflation ticks up in December
January 24, 2014
In December, consumer prices increased a seasonally-adjusted 0.2% over the previous month, which matched the result recorded in November. According to Statistics Canada, the increase reflected higher prices in six of the eight categories measured, with alcoholic beverages and tobacco products registering the largest gains.
Annual headline inflation picked up from 0.9% in November to 1.2% in December, which was just below market expectations of an acceleration to 1.3%. As a result of the annual increase, inflation is now within the Central Bank's tolerance margin of plus/minus 1.0 percentage points around its target of 2.0%. Meanwhile, annual average inflation was unchanged in December, holding steady at 0.9% for the fourth consecutive month. Core annual inflation, which excludes volatile items such as gasoline and fresh food, inched up from 1.1% in November to 1.3%.
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