Canada Inflation Fall for Fourth Month


Canadian consumer prices fell a fourth consecutive month in January, led by reduced costs for natural gas and motor vehicles.

The consumer price index fell a more-than-expected 0.3 percent from December, as natural gas declined 6 percent and automobiles were down 5.3 percent, Statistics Canada said today in Ottawa. The year-over-year inflation rate slowed to 1.1 percent, the least in two years, from 1.2 percent in December. Annual inflation peaked at 3.5 percent in August 2008.

Bank of Canada Governor Mark Carney says the annual rate will fall below zero in the second and third quarters on a drop in energy prices. The bank sets interest rates to keep inflation between 1 percent and 3 percent. Carney has said he may cut borrowing costs again if needed to ease a recession and bring inflation back to the target range within two years.

Inflation excluding gasoline and seven other volatile items, the so-called core rate, slowed to 1.9 percent in January from December’s 2.4 percent pace. On a monthly basis, core prices fell 0.4 percent. Economists predicted core prices would advance 2.2 percent from a year earlier and fall 0.1 percent on a monthly basis.


TradingEconomics.com, Bloomberg
2/20/2009 5:29:40 AM