Canadian Inflation Accelerates to 1.4% on Gasoline | Nigeria Newspaper- Nigeria News| Naija News

23.9.17

Canadian Inflation Accelerates to 1.4% on Gasoline

By
Bank of Canada
Canadian consumer prices continued to show some signs of pick up last month, Statistics Canada said Friday in a report that could bolster policy makers’ confidence inflation is trending higher from extremely low levels.

Highlights of August CPI Report

  • Annual inflation accelerated to 1.4 percent, largely due to higher gasoline prices
  • The rate came in slightly below economist expectations for a 1.5 percent increase in August
  • The average of the Bank of Canada’s three key core inflation measures were 1.53 percent, versus 1.47 percent in July

Key Takeaways

After two rate hikes since July, investors are anticipating as many as three more increases from the Bank of Canada by the end of next year on the expectation the central bank will act to quash any inflation pressures.
While the inflation rate remains below the central bank’s target, the Bank of Canada has justified the rate hikes by citing quickly vanishing excess capacity in the economy and by claiming the forces keeping inflation subdued are temporary.
The clearest sign the recent weakness in prices has at least bottomed out are signs of rising key core inflation readings. The 1.53 percent reading is the highest since February.
Sluggish inflation has primarily been a goods phenomenon. The prices for goods have actually been deflating on a year-over- year basis in recent months, but showed some pick-up in August with a 0.4 percent reading. Service price inflation has been at or above the central bank’s 2 percent target for 10 months, and posted a 2.2 percent gain in August.

Other Details

  • For the three so-called core measures, the ‘common’ core rate was 1.5 percent, the ‘median’ core rate was 1.7 percent and the ‘trim’ measure was 1.4 percent
  • On the month, consumer prices were up 0.1 percent, versus a forecast for a 0.2 percent increase. On a seasonally adjusted basis, the price index rose 0.2 percent on the month.
  • Major contributors. Higher gasoline prices — which were up 8.6 percent over the 12-month period — were the major factor behind the rise in overall inflation.
  • Excluding gasoline, headline inflation was 1.1 percent from a year earlier, unchanged from July. Inflation would have been down 0.1 percent on a monthly basis excluding gasoline.

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