Canada: Inflation picks up in December and ends the year at 2.4%
January 25, 2011
In December, consumer prices remained unchanged over the previous month, following the subdued 0.1% price increase in November. The reading came in below market expectations, which had seen consumer prices adding 0.2% in December. That said, annual headline inflation accelerated and inched up from a 2.0% increase in November to 2.4% in December. The main drivers behind the acceleration in annual inflation were rising transportation prices (+4.9% year-on-year) and higher shelter costs (+2.7% yoy), which were partially offset by lower prices for clothing and footwear (-2.0% yoy). Annual core inflation, which excludes oil and fresh food prices, inched up to 1.5% in December (November: 1.4%) but remained below the 2.0% target set by the Bank of Canada (BoC). The Bank of Canada forecasts headline inflation to average 2.1% in 2011 and 1.9% in 2012.