Canadian Inflation Rate Remains at Three-Year Low in December
The consumer price index advanced 0.8 percent in December from a year earlier, matching the November increase, Statistics Canada said today from Ottawa. The core rate, which excludes eight volatile products, fell to 1.1 percent from 1.2 percent, the slowest since February 2011. Economists said both measures would accelerate, with surveys showing median forecasts of 1.2 percent overall inflation and a 1.4 percent core rate.
Bank of Canada Governor Mark Carney said two days ago a boost to his 1 percent policy interest rate is “less imminent” because inflation has been slower than forecast and will remain below his 2 percent target through the first half of next year. The central bank said the consumer price index would increase an average 1.1 percent in the October-December period and 0.9 percent in the first quarter of this year.
Food inflation slowed to a 1.5 percent year-over-year pace in December from 1.7 percent in November, as fresh vegetables declined 5.8 percent, Statistics Canada said today.
There was a “slightly deflationary environment” in food prices near the end of last year, Empire Co. Chief Executive Officer Paul Sobey said on a Dec. 13 earnings call. Empire controls the Sobeys grocery-store chain.
Prices in the shelter category advanced 0.6 percent, slower than November’s 1 percent pace, as mortgage interest costs dropped 3.6 percent.
Governor Carney two days ago said signs that consumers are stabilizing debt loads that have reached a record 165 percent of disposable income are another reason to delay raising interest rates.
“The more muted inflation outlook and the beginnings of a more constructive evolution of imbalances in the household sector suggest that the timing of any such withdrawal is less imminent than previously anticipated,” Carney, 47, said at a Jan. 23 press conference in Ottawa. The central bank’s benchmark interest rate has been 1 percent since September 2010, the longest pause since the 1950s.
The Bank of Canada pared its forecast for economic growth this year to 2 percent from an October prediction of 2.3 percent. The economy will reach full output in the second half of 2014 instead of the end of 2013, the bank said, as growth accelerates to 2.7 percent next year.
On a monthly basis, overall inflation and the core rate both fell 0.6 percent in December. Economists surveyed by Bloomberg predicted both measures would fall by 0.2 percent. The decline in the core rate was the largest since June 2011.
Seasonally adjusted inflation fell 0.1 percent in December from November and seasonally adjusted core inflation rose 0.1 percent.
To contact the reporter on this story: Greg Quinn in Ottawa at firstname.lastname@example.org