OTTAWA – Canada’s national annual inflation rate rose to 1.2 per cent last month, slightly higher than in November but still low by historic standards, Statistics Canada reported Friday.
The December inflation number came in below the Bank of Canada’s ideal target of two per cent, but within the desired range of one and three per cent.
It was also within analyst estimates. The November inflation rate was unusually low at 0.9 per cent and was expected to rise but continue to be relatively low, as it has been for more than a year.
That last time Canada’s inflation rate hit the central bank’s ideal target of two per cent was in April 2012, according to Statistics Canada figures.
Friday’s report “carried much more weight than normal, given that the Bank of Canada has lifted inflation to exalted status in their worry list,” BMO chief economist Douglas Porter wrote in a note following the release. “However, the results are a stalemate for the market since they precisely met the bank’s assumptions.”
“For now, though, inflation has moved above the very low end of the Bank’s comfort zone, providing a touch of breathing space and easing one source of pressure on the loonie,” Porter added.
The rise in overall inflation in December was largely attributable to higher gasoline prices, which rose 4.7 per cent from a year earlier.
Higher shelter costs and food prices also increased last month, while costs for health and personal care declined, Statistics Canada reported.
In all, six of the eight major price components tracked by Statistics Canada rose in December.
Consumer prices rose in nine provinces, with British Columbia being the only exception, with no change on a year-over-year basis.
Prince Edward Island saw the largest increase at three per cent, while Quebec posted the lowest at 0.8 per cent. Quebec was the only province that saw store-purchased food decline.
After excluding some volatile items such as energy, core inflation in December rose to 1.3 per cent compared to 1.1 per cent in November.
“Market reaction should be limited given the on-consensus core reading,” CIBC economist Peter Buchanan wrote in a brief note.
On a month-to-month comparison, the consumer price index declined 0.2 in December from November before seasonal adjustments but increased 0.2 per cent from November with seasonal adjustments.
In 2013, the average of the 12 month-month increases was 0.9 per cent, compared with 1.5 per cent in 2012 and 2.9 per cent in 2011, Statistics Canada said in a second report issued Friday.