Canadian CPI Inflation in April Accelerated

May 21, 2008

Canadian consumer prices on a seasonally adjusted basis rose 0.4% last month, twice as much as their U.S. counterpart. But more broadly, Canadian consumer prices in the six months to April went up just 2.2% saar, half the 4.5% pace of U.S. consumer price inflation over that period. The unadjusted 0.8% climb in total Canadian consumer prices was the biggest monthly advance since March 2007, and on-year inflation rose for the first time since Nov 2007, climbing back to 1.7% after dropping to 1.4% in March from 1.8% in Feb. Gasoline prices jumped 11.6% y/y after gaining 7.9% in the year to March, and all other consumer prices accelerated to a 12-month rise of 1.3% from 1.0% in the year to March. Food prices rose 0.8% m/m but merely 1.2% y/y. Analysts on average had anticipated a 1.4% on-year gain in total CPI and a 1.3% rise in targeted CPIX, which instead registered a 12-month increase of 1.5%. The main inflationary impulse last month aside from the 4.9% m/m rise in all energy was a smaller on-year drop in motor vehicle prices of 6.6% after a decline of 7.1% in the year to March. Canada still has relatively low inflation and, more importantly, sub-target inflation with sub-trend economic growth. This report probably will not derail a 25-bp rate cut on June 10th.



Comments are closed.