Canadian inflation slows to 2.2 percent in September

  • Canadian inflation slows to 2.2 percent in September

Canadian inflation slows to 2.2 percent in September

Canada's consumer price inflation decelerated in the month of September, coming in below consensus expectations.

In its most recent forecasts released in July, the central bank estimated inflation would average 2.5 percent in the third quarter - which ends in September - before returning back to near the 2 percent target by 2019.

Although Canadian inflation and retail sales data came in weaker than expected on Friday, market operators predicted the Bank of Canada still would raise interest rates again next week to keep a booming economy in check.

Compared to a 19.9 percent spike in August gasoline price increases slowed in September, which saw a year-on-year jump of 12 percent. CPI common, which the bank says is the best gauge of the economy's underperformance, dipped to 1.9 per cent from 2.0 per cent in August.

The transportation index, which includes gasoline, was up 3.9 percent in September compared with a 7.2-percent move in August as gasoline prices last month went up 12 percent compared with a 19.9-percent increase in August.

"We have very high household debt levels".

However, the transportation group remained the largest contributor to the overall year-on-year increase in the index.

Air transportation costs, which jumped 16 percent in July, plunged 17 percent in September. Alcoholic beverages and tobacco products were up 4.4 per cent.

The average of the three measures of core inflation, which look to strip out more-volatile items like gas prices and are closely scrutinized by the Bank of Canada, was 2.0 per cent in September compared with 2.1 per cent in August.

Separately, Statscan said the value of Canadian retail trade unexpectedly fell by 0.1 per cent in August, the second decline in three months, in part due to lower sales of gas and clothing.

Motor vehicle and parts dealers experienced a gain of 0.8 per cent in August - the first time in three months - because of higher sales at new auto dealers and at automotive parts, accessories, and tire stores to a lesser extent.