Canada Inflation Rate At Over 2-Year High


Consumer prices in Canada increased 2.1 percent year-on-year in January of 2017, following a 1.5 percent rise in the previous month and beating market expectations of 1.6 percent. It is the highest gain in consumer prices since October of 2014, boosted by gasoline and shelter, bringing inflation to above the central bank target of 2 percent.

Year-on-year, prices were up in seven of the eight major components: transportation rose 6.3 percent after a 3 percent gain in December, led by gasoline prices, which posted their largest increase since September 2011, up 20.6 percent. The increase was partly attributable to higher crude oil prices in January, as well as a monthly decline one year earlier. The purchase of passenger vehicles index rose more in January (+3.8 percent) than in December (+2.6 percent). This acceleration was partly attributable to the greater availability of new 2017-model-year vehicles. The rail, highway bus and other inter-city transportation index was up 3.2 percent.

The shelter index rose 2.4 percent, with the homeowners' replacement cost index (+4.3 percent) contributing the most to the gain. The natural gas index increased 15.6 percent, after decreasing the previous month. Fuel oil prices rose 18.3 percent after increasing 4.2 percent a month earlier. At the same time, electricity prices (-0.7 percent) were down year over year for the first time since February 2013.

Consumers paid 2.1 percent less for food in January than they did a year earlier. The food purchased from stores index decreased 4.0 percent, with broad-based declines among its components. The fresh vegetables (-15.5 percent), fresh fruit (-10.8 percent) and meat (-1.7 percent) indexes all posted larger year-over-year declines in January than in December. A limited number of food product categories recorded price increases. Prices for food purchased from restaurants were up 2.3 percent, matching the gain in December.

On a monthly basis, consumer prices jumped 0.9 percent after declining 0.2 percent in December.

Excluding food and energy, consumer prices were up 1.7 percent on the year and excluding gasoline only, prices gained 1.5 percent. 


Statistics Canada | Joana Taborda | joana.taborda@tradingeconomics.com
2/24/2017 1:46:30 PM