Canadian inflation tempered by lower gas prices
Canadian consumer prices continued to hold steady in a tight range around the Bank of Canada's inflation target, giving policy makers one less reason to consider immediate interest rate cuts.
Annual inflation in September was unchanged at 1.9 per cent, Statistics Canada reported Wednesday. That was below economist expectations for a 2.1-perr-cent reading. Underlying price pressures — as measured by core inflation — ticked up slightly to 2.1 per cent from two per cent in August.
• Stronger inflation dynamics in Canada are one reason why economists and markets have been anticipating fewer cuts, and a slower pace of reductions, by the
• Bank of Canada than the Federal Reserve. Both the headline and core readings have been steady at around two per cent in recent months
• In fact, inflation in the third quarter turned out stronger than the Bank of Canada anticipated in its last quarterly forecasts released in July, when it projected it to slow to 1.6 per cent amid easing gasoline prices. Instead, inflation in Canada averaged 1.9 per cent in the quarter
• While the headline inflation rate has been more volatile, underlying price pressure has been stable near the Bank of Canada’s two-per-cent target for well over a year. The core rate hasn't surpassed 2.1 per cent since 2009.
• On a monthly basis, consumer prices fell 0.4 per cent in September, a bigger decline than the 0.2 per cent expected by analysts
• On a seasonally adjusted basis, prices fell 0.1 per cent. That's the third monthly decline in seasonally adjusted prices in the past four months — reflecting weaker gasoline prices and declines in air transportation
• While there was a small drop in gasoline prices in September, they are down 10 per cent from a year earlier
• The drop in the consumer price index in September was led by a decline air transportation prices and tuition fees. Clothing prices were the main upward contributor in September
• The average of three measures of core inflation tracked by the Bank of Canada rose to 2.07 per cent, from 1.97 per cent in August. All three measures recorded a tenth of a percentage point increase, with the common rate at 1.9 per cent, the median at 2.2 per cent and trim at 2.1 per cent