Canada: Inflation falls in August
September 20, 2013
In August, consumer prices increased a seasonally-adjusted 0.1% over the previous month, which matched the performance recorded in July. According to Statistics Canada, the monthly price increase mainly reflected higher prices for food, as well as for recreation and education.
Annual headline inflation fell from 1.3% in July to 1.1% in August, which was in line with market expectations. Despite the decrease, inflation remains within the Central Bank's tolerance margin of plus/minus 1.0 percentage points around the target of 2.0%. Meanwhile, annual average inflation inched down from 1.0% in July to 0.9% in August. Core inflation, which excludes volatile items such as gasoline and fresh food, ticked down from 1.4% in July to 1.3% in August.
According to its July Monetary Policy Report, the Bank of Canada expects headline inflation to average 1.0% in 2013 and 1.7% in 2014. FocusEconomics Consensus Forecast panelists expect inflation to average 1.4% in 2013, which is unchanged from the previous month's forecast. The panel expects inflation to average 1.9% in 2014, which is also unchanged from last month's estimate.
Author: Carl Kelly, Economist