Canada: Inflation rises on higher gasoline prices
March 27, 2013
In February, consumer prices shot up a seasonally adjusted 0.7% over the previous month. The reading, contrasted the flat reading recorded in January and, in fact, represents the highest month-on-month price increase observed in seven years. According to Statistics Canada, the monthly price increase mainly reflected higher prices for transportation, in particular gasoline.
As a result of the monthly increase, annual headline inflation rose from 0.5% in January to 1.2% in February, overshooting market expectations of a 0.8% rate. Currently, inflation remains below the Central Bank's target of 2.0% but within the tolerance margin of plus/minus 1.0 percentage points. Meanwhile, annual average inflation edged down from 1.4% in January to 1.2% in February.
Simultaneously, core inflation, which excludes volatile items such as gasoline and fresh food, rose from 1.0% in January to 1.4% in February.
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. 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%.