‘The relative stability in core measures suggests that underlying inflation could be basing, but that level of excess supply remain important preventing an increase in inflationary pressures.’ – Charles St-Arnaud, Nomura International Plc
Canadian consumer prices advanced more than expected in January, official figures revealed on Friday. Statistics Canada reported its headline Consumer Price Index surged 2.1% year-over-year, after rising just 1.5% in December. On a monthly basis, the index jumped 0.9% in January, following the preceding month’s 0.2% fall and surpassing analysts’ expectations for a 0.3% rise. In terms of annual inflation, gasoline prices contributed most, climbing 20.6% on a yearly basis in January, the strongest rate since September 2011. In addition, higher energy prices forced transport costs to grow at an annualised pace of 6.3%, while food prices posted a decline of 2.1% compared with a 1.3% drop registered in 2015, though still managing to advance 0.6% month-on-month in January. In the meantime, shelter and goods prices ticked 2.4% and 2.0% higher over the year, whilst services-industry prices edged up 2.3%.
Nevertheless, further increase in inflation is set to rule out any short-term monetary easing by the BoC amid raising uncertainty related to both the US and domestic economic outlooks.
