Canadian inflation stays at 1.2 per cent as price pressures ease

OTTAWA – It cost a little more to fill up at the gas pump and to buy the new winter fashions, but consumer prices remained relatively tame in September and there were few signs of price pressures in the future, Statistics Canada reported Friday.

Canada’s annual inflation rate stayed at 1.2 per cent, matching the previous month and May for the lowest level in more than two years.

On a month-to-month basis, prices rose 0.2 per cent as gasoline prices climbed 2.1 per cent from August and clothing increased 6.2 per cent as retailers unveiled their fall and winter merchandise.

For the annual inflation rate, the agency said an increase in prices for gasoline and electricity were the main contributors, but they were offset by declines in the cost of purchasing motor vehicles and women’s clothing.

There was still no sign of the impact of this summer’s drought in the U.S. and parts of Canada on overall food prices, which in September were a modest 1.6 per cent higher than last year.

On a month-to-month basis, food prices actually fell 1.1 per cent in September, led by seasonal declines in fresh vegetables and fruit.

The Bank of Canada’s core rate, which measures underlying price pressures by excluding volatile items such as gasoline, declined three-tenths of a point to 1.3 per cent.

The report, which was broadly in line with economist expectations, will likely play little role in the Bank of Canada’s interest rate decision next week. If anything, the bank is likely to judge that it must keep interest rates low in order to meet its goal of lifting annual inflation to the desired two per cent target in the medium term.

Analysts are expecting bank governor Mark Carney to move from a bias towards tightening money supply to more neutral language in his analysis, which would signal to markets he considers the economy will require a stimulative policy for some time still.

On an annual basis, Statistics Canada said gasoline prices were 4.7 per cent higher last month from September 2011, and electricity costs rose six per cent — the two main contributors to the 1.2 per cent inflation rate.

Dampening inflation, natural gas fell 14.2 per cent, mortgage costs were 2.2 per cent lower, video equipment prices fell 14.6 per cent, and motor vehicles declined 1.8 per cent.

The agency said there was an average 3.7 per cent increase for post-secondary tuition across the country, despite Quebec’s freeze in fees. Tuition costs rose highest in Saskatchewan, up 5.8 per cent.

Regionally, prices in Ontario and British Columbia rose the least in September at 0.7 per cent, the agency said.




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Canadian inflation stays at 1.2 per cent as price pressures ease

  1. And yet the CPC is currently passing a budget bill that will tax workers more if their company is good enough to fund their health plan.

    Because less money in the hands of the workers is what we really need right now.

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