Canada: Inflation stabilizes in December
January 25, 2013
In December, consumer prices fell a seasonally adjusted 0.1% over the previous month, which followed the 0.2% decline recorded in November. According to Statistics Canada, the monthly price decrease mainly reflected lower prices for transportation.
Despite the monthly decline, annual headline inflation remained unchanged at 0.8% in December, undershooting market expectations of a 1.2% increase. Currently, inflation remains below the Central Bank's target of 2.0% with a tolerance margin of plus/minus 1.0 percentage points. In the full year 2012, inflation averaged 1.5%, which was less than the 2.9% rate registered in 2011.
Simultaneously, core inflation, which excludes volatile items such as gasoline and fresh food, inched down from 1.2% in November to 1.1% in December.
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).