Canadian March Inflation Slows Unexpectedly

Canadian annual inflation unexpectedly slowed in March on falling gasoline and car prices, which may add to expectations the Bank of Canada will adopt extraordinary policies to boost growth., Bloomberg 4/19/2009 8:26:34 PM

The year-on-year inflation rate fell to 1.2 percent from 1.4 percent in February, Statistics Canada said today in Ottawa. Consumer prices rose 0.2 percent from February.

The report may provide more room for the Bank of Canada to implement new measures to boost growth. Last month, the central bank cut its benchmark lending rate to a record 0.5 percent, and said it is looking at how it may use policies beyond interest rate moves, if needed, to revive an economy hit by a recession and tight credit markets.

Gasoline prices fell 21 percent from a year ago, and the cost of buying or leasing a car dropped 7.3 percent, helping to push the annual index lower, the statistics agency said.

The annual inflation rate excluding gasoline and seven other volatile items -- the so-called core rate -- rose to 2 percent in March from 1.9 percent in February. On a monthly basis, core prices rose 0.3 percent. Economists forecast the core index would advance 1.9 percent from a year before and increase 0.2 percent during the month, based on the median of 20 estimates.

Canadian March Inflation Slows Unexpectedly