Canada Inflation Slows for 2nd Month on Cheaper Cars and Gas

Canada’s annual inflation rate slowed for a second month in March to 1.3 percent, led by cheaper gasoline and smaller markups at auto dealers.

Gasoline prices fell by 13.6 percent, while automobile price gains slowed to 3.2 percent in March from 5 percent in February, Statistics Canada said Friday from Ottawa. The core inflation rate that excludes eight volatile products increased

2.1 percent, compared with 1.9 percent in the prior month.

Economists surveyed by Bloomberg News predicted overall inflation of 1.2 percent, and a core rate of 1.7 percent.

The report is in line with the Bank of Canada’s forecast earlier this month that inflation will slow in coming months on cheaper gasoline, slack in the economy overall, and a reduced lift from imported goods made more expensive by a lower Canadian dollar.

CPI rose 0.6 percent on the month in March, the highest in almost a year. Economists predicted a 0.5 percent gain. Core prices rose 0.7 percent, versus the 0.4 percent median forecast.

Food costs may be showing less of a pinch from the dollar’s fall earlier this year. Price gains slowed to 3.6 percent in March from 3.9 percent in February, including slower rises for the fruit and vegetable category dominated in winter by imports from the U.S. and Latin America.

Canada’s central bank will probably keep its policy lending rate at 0.5 percent into next year, according to a Bloomberg economist survey, with prices lagging policy makers’ 2 percent target until then.

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