Canada Inflation Rate Rises to 1.9%


Canada's consumer price index rose 1.9 percent, after a 1.7 percent gain in August. The core rate that excludes eight volatile items such as gasoline slowed to 1.5 percent from 1.6 percent, the slowest pace since December.

Bank of Canada Governor Mark Carney said Oct. 20 that core inflation, which he uses as a guide to underlying price trends, will remain below 2 percent until the fourth quarter of 2012 on slower consumer spending and global growth. The bank kept its key lending rate at 1 percent this week and its forecast anticipated a gradual” reduction in monetary stimulus because of considerable slack” in the economy.

Energy price gains accelerated to 5.6 percent in September from a year earlier, versus a 5 percent gain the previous month, Statistics Canada said. Shelter costs advanced 2.5 percent and passenger vehicle prices rose 5 percent as manufacturers curbed discounts, the report said.

The Bank of Canada said this week that sales tax increases in Ontario, British Columbia and Nova Scotia will quicken inflation by 0.7 percentage point from July to June 2011.

The bank predicted inflation would average 1.8 percent in the third quarter and 2.1 percent in the fourth quarter, and the core rate would be 1.6 percent in both periods.

On a monthly basis, overall consumer prices rose 0.2 percent in September after a 0.1 percent decline the previous month. The core rate rose 0.2 percent in September.


TradingEconomics.com, Bloomberg
10/22/2010 4:36:49 PM