Canada: Inflation edges down in January
February 22, 2013
In January, consumer prices fell a seasonally adjusted 0.1% over the previous month, which contrasted the flat reading recorded in December. According to Statistics Canada, the monthly price decrease mainly reflected lower prices for transportation, clothing and footwear as well as for food.
As a result of the monthly decline, annual headline inflation edged down from 0.8% in December to 0.5% in January, undershooting market expectations of a 0.6% increase. 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 inched down from 1.5% in December to 1.4% in January.
Simultaneously, core inflation, which excludes volatile items such as gasoline and fresh food, eased from 1.1% in December to 1.0% in January.
According to its January Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.3% in 2013 and 1.9% in 2014 (previously forecasted: 1.6% and 2.0%, respectively). FocusEconomics Consensus Forecast panellists expect inflation to average 1.8% in 2013, which is unchanged from the previous month's forecast. For 2014, the panel expects inflation to average 2.1%.