Canada: December Inflation Rate Rises to 1.5%

Canada’s annual inflation rate rose less than expected in December as cheaper food costs offset higher gasoline prices, data from Statistics Canada showed on Friday, leaving inflation below the Bank of Canada’s target.

The annual inflation rate rose to 1.5 per cent from November’s 1.2 per cent, short of analysts’ forecasts for an increase to 1.7 per cent.

Gasoline prices jumped 5.5 per cent compared to the year before. But annual food prices fell for the third month in a row and were down 1.3 per cent in December as Canadians paid less for fresh fruit and vegetables.

Two of the three new measures of core inflation the Bank of Canada established late last year showed underlying inflation was closer to the central bank’s 2 per cent target.

CPI median, which shows the median inflation rate across CPI components, held at 2.0 per cent after the previous month was revised up, while CPI trim, which excludes upside and downside outliers, was also steady at 1.6 per cent.

But CPI common, which the central bank has said has the best correlation to the output gap, was furthest away from target, edging up to 1.4 per cent from 1.3 per cent. Common measures price changes across categories in the CPI basket.

The Globe and Mail

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