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Inflation in Canada picked up slightly in January on rising gasoline prices, but not by enough to raise any worries with overall price pressures remaining subdued.
Annual inflation accelerated to 1 per cent last month, from 0.7 per cent in December, Statistics Canada reported Wednesday in Ottawa. Economists had expected 0.9 per cent according to the median estimate in a Bloomberg survey.
Core inflation, often seen a better measure of underlying price pressures, ticked up to 1.5 per cent from 1.4 per cent in December.
While inflation is expected to accelerate in coming months on higher energy costs, policy makers see little immediate threat from rising prices despite extraordinary levels of stimulus throughout the economy. Despite a temporary pickup early this year, the Bank of Canada doesn’t anticipate inflation will sustainably return to its 2 per cent target until 2023.
“Beyond the headline volatility, inflation is likely to remain subdued at least until the health crisis has passed,” James Marple, an economist at Toronto-Dominion Bank, said in a report to investors. “Once on the other side, the story will shift.”
Price pressures in Canada accelerated in January even with fresh lockdowns across the country to curb the second wave of coronavirus cases. On a monthly basis, CPI rose 0.6 per cent compared with a forecast of a 0.5 per cent increase in a Bloomberg survey.
Other drivers of higher inflation in January included increases in car prices, Statistics Canada said.