Canada’s inflation, gauged by the consumer price index, remained the same in April on a year-on-year basis, while it accelerated on a sequential basis. Consumer price inflation remained unchanged at 1.6 percent year-on-year, whereas prices rose 0.5 percent month-on-month in April. Both the year-on-year and month-on-month figures came in below the consensus expectations.
The headline figure was mainly driven by an acceleration in energy price growth. Energy prices rose 9.6 percent year-on-year, as compared with the 8.5 percent rise recorded in the previous month. Food prices were up 0.5 percent sequentially, but continue to be negative on a year-on-year basis.
Price growth is mainly being held back by subdued goods inflation. Services price growth came in stronger at 2.5 percent, up from March’s 2.2 percent. Meanwhile, the Bank of Canada’s core measures remained either flat or down, with CPI-median falling to 1.6 percent, CPI-trim to 1.3 percent and CPI-common unchanged at just 1.3 percent, noted TD Economics in a research report.
April was yet another month for subdued inflation in Canada. This is contrary to other data that indicate towards stronger economic growth. This suggests that Canada is operating at a fair degree of economic slack, but absorbing it rapidly, stated TD Economics.
Canada is expected to close its output gap by the end of 2017. As long as the Canadian economy continues to grow, it will put the Bank of Canada in a position to start hiking interest rates in the spring of 2018, added TD Economics.The material has been provided by InstaForex Company – www.instaforex.com
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