- Canada CPI growth slowed to 0.7% year-over-year
- Food price growth decelerated
- Lower inflation leaving the BoC free to keep interest rates low
Canadian consumer price growth slowed in December – to 0.7% compared to a year ago versus 1.0% in November. Weak demand for transportation continued to weigh on airfares – which were down 14.5% from a year ago on much weaker-than-normal holiday travel demand. Food price growth also slowed to 1.1% from 1.9% in November. Energy prices were still down 4% from a year ago despite a 2% increase from November levels.
The Bank of Canada’s preferred ‘core’ CPI measures (which are a better gauge of underlying inflation pressures) also slowed supporting our view that the Bank of Canada will maintain their highly stimulative monetary stance.