Canada Inflation Rate Falls to 2.2% in September



The inflation rate in Canada fell to 2.2 percent in September of 2018 from 2.8 percent in August and well below market expectations of 2.7 percent. It was the lowest inflation rate since May, as the transportation index eased, still it remained the largest contributor to the year-over-year increase in consumer prices.

Year-on-year, prices were up in all eight major components, with transportation slowing to 3.9 percent from 7.2 percent in the previous month and making the largest contribution.

Prices for non-durable goods advanced at a softer pace (3.0 percent compared to 3.8 percent in August). Prices of gasoline eased (12.0 percent compared to 19.9 percent), as supply disruptions in the wake of Hurricane Harvey, which drove up prices at the pump in September 2017, no longer affect the 12-month movement. Also, cost of durable goods slowed to 0.2 percent, after increasing 1.1 percent in August, mainly due to the purchase of passenger vehicles (0.6 percent compared to 2.3 percent), which was largely attributable to the lower availability of new model-year vehicles.

Prices of services rose less than in the previous month (2.5 percent compared to 3.1 percent), driven by the cost of travel, which decreased on a month-over-month basis, namely air transportation (-16.6 percent), traveller accommodation (-6.2 percent) and travel tours (-3.4 percent). Additional downward pressure came from recreation, education and reading (0.7 percent compared to 1.9 percent); health and personal care (1.3 percent compared to 1.4 percent); and alcoholic beverages and tobacco products (4.4 percent compared to 4.6 percent).

On the other hand, cost increased further for household operations, furnishings and equipment (1.3 percent compared to 0.8 percent); food (1.8 percent compared to 1.6 percent) and clothing and footwear (1.5 percent compared to 0.5 percent). 

On a seasonally adjusted monthly basis, the CPI declined 0.4 percent, following a 0.1 percent fall in the previous month, as transitory pressures from the gasoline, air transportation and travel tours indexes, which boosted the all-items CPI in July and August, eased.

The BoC's annual core inflation, which excludes volatile items, went down to 1.5 percent from 1.7 percent in August and below market consensus of 1.8 percent.

Canada Inflation Rate Falls to 2.2% in September


Statistics Canada | Stefanie Moya | stefanie.moya@tradingeconomics.com
10/19/2018 1:07:34 PM