Canada’s annual inflation rate holding steady at 2.2 per cent
OTTAWA - Canada’s annual inflation rate held steady at 2.2% in December, Statistics Canada said on Wednesday, supported by higher energy prices and balanced out by slower cost gains in food and cars.
The number is in line with a Reuters analysts’ poll. Energy prices were 5.5% higher in December compared with the same month last year, and were up 1.5% over the previous month.
Wednesday’s data comes the same day the Bank of Canada is due to announce its next overnight rate decision, which it has held steady since October 2018 even as several of its international counterparts have eased.
Money markets expect the central bank to hold rates unchanged again on Wednesday. The central bank aims to keep inflation at 2%. [BOCWATCH]
“The key point is both headline and core inflation are for all intents and purposes at the Bank of Canada’s target,” said Doug Porter, chief economist at the Bank of Montreal.
The Canadian dollar pared gains, touching 1.3047 to the U.S. dollar after the data were released.
CPI common, which the central bank says is the best gauge of the economy’s underperformance, was at 2.0%, while CPI median, which shows the median inflation rate across CPI components, was at 2.2%. CPI trim, which excludes upside and downside outliers, was at 2.1%.
“We are getting less core inflation pressure than had been expected and I think we’ll see more of that as the rest of the year unfolds,” said Derek Holt, vice president of capital markets economics at Scotiabank.
In 2019, consumer inflation averaged 1.9%, down from 2.3% in 2018, Statscan said.
Higher mortgage interest costs led inflation in 2019, gaining 7.6%, while gasoline prices helped offset that by declining 6.1%. Fresh vegetable prices jumped 12.7% last year, Statscan said.
Statscan also released new home prices for December, which gained 0.2% in December, led by those in Ottawa. Prices in Toronto were up by 0.2%, while in Vancouver they rose 0.4%.
Separately, Statscan said Canadian wholesale trade fell for the third time in five months in November, declining 1.2% as sales of motor vehicles and motor vehicle parts and accessories dropped.
Statscan said wholesale inventories increased by 0.4% while sales volumes declined by 0.9%.