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Canada Inflation Rate Cools

Smaller increases at the gas pumps helped Canada’s  annual rate of inflation ease in October.Smaller increases at the gas pumps helped Canada’s  annual rate of inflation ease in October.

Canada›s rate of inflation came in at 1.4% on a year-over-year basis in October, following a 1.6% rate in September, easing mainly due to smaller gasoline price increases, Statistics Canada said Friday.

The government agency said shelter and transportation prices contributed the most to October›s rise in its consumer price index, while clothing and footwear prices showed a decline when compared with October 2016, CBC reported.

Transportation prices were up by 3% on a year-over-year basis in October, following a 3.8% increase in September. The slowdown was led by gasoline prices, which increased 6.5% year-over-year in October after increasing 14.1% the previous month in the aftermath of Hurricane Harvey.

Consumer prices for household operations, furnishings and equipment rose 0.2% in the 12 months to October after the three previous months all showed year-over-year declines. Clothing and footwear prices were down in October by 1.5% compared to the previous year, with the cost of women›s clothing fell 4.6% compared with a year ago.

Of the three inflation measures closely watched by the Bank of Canada for the purpose of setting monetary policy, Statistics Canada said the CPI-common reading for October was 1.6%, up from September›s 1.5%. The CP-median reading eased to 1.7% from 1.8%, while CPI-trim remained steady at 1.5%.

The inflation rate has remained below the Bank of Canada›s stated target of 2%, even as the Canadian economy enjoyed a surge earlier this year.  However, some market watchers see that situation changing, with inflation expected to pick up.

“There is good reason to think inflation will soon turn a corner,» said TD senior economist James Marple in a commentary. «Wage growth has accelerated notably in recent months and job growth has been concentrated in full-time positions.”

 

 

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