Canadian CPI Inflation Subdued

April 17, 2009

Canadian on-year inflation settled back to 1.2% in March from 1.4% in February.  Such had also been at 1.2% in December and 1.1% in January.  The seasonally adjusted consumer price index dropped on month for the third time in four tries.  The monthly dip in March was 0.3% and resulted in no change from December versus an annualized 4.8% plunge during the fourth quarter of 2008.  Averaging the two quarters, consumer prices fell 2.3% at a seasonally adjusted annualized rate since September.

Food and energy moved in opposite directions.  On-year food price inflation of 7.9% was near to a 22-year high.  Gasoline plunged 21.0% on year.  All energy prices slid 0.1% on month and by 11.2% on year, a larger 12-month drop than that of 8.8% in the year to February.  Core CPI firmed 0.3% in March but was unchanged seasonally adjusted.  On-year core CPI ticked up to 2.0% after readings of 1.9% in the first two months of 2009.  The Bank of Canada had expected such to print at 2.1% last quarter before falling to 1.5% in 2Q09, 1.2% in 3Q09 and 1.1% in the final quarter of this year.  The thinking of central bank officials is unlikely to be modified by these latest data.  On March 3rd, the overnight target rate was halved to 0.5%.  Policymakers meet again on April 21st and will release a new semi-annual Monetary Policy Report on April 23rd.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.



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