Negative Canadian Consumer Price Inflation
July 17, 2009
The Canadian CPI declined 0.3% in the year to June, its first on-year drop since November 1994. After peaking at 3.5% last August, inflation fell to 1.1% by December and +0.1% in May. Higher energy costs, mostly for gasoline, accounted for a June-over-May seasonally adjusted 0.3% increase of consumer prices after a rise of 0.2% in May. The unadjusted CPI went up 0.3% last month. These results were a tenth higher than forecast. But the core rate of inflation finally dropped below its 2% target to 1.9% on-year. Food prices firmed 0.1% seasonally adjusted and 5.5% from June 2008 unadjusted. Energy prices increased 3.5% from May unadjusted but fell 19.0% from June 2008. Bank of Canada officials are projecting a trough of minus 0.8% in total CPI inflation in the current calendar quarter and no return to 2.0% until the second half of 2H11. Core inflation is expected to bottom at 0.9% next quarter and not climb back to the 2% target until 2H11 as well. Monetary policymakers are scheduled to release a new interest rate policy statement next Tuesday at 09:00 EDT (13:00 GMT) and will follow that on Thursday with a quarterly Update of the April Monetary Policy Report. Canada’s target rate is already at the perceived low of 0.25%, so no rate change is expected there. So far, officials have rejected quantitative easing but have thought through details of such a program should one eventually become necessary.
Copyright Larry Greenberg. All rights reserved. No secondary distribution without express permission.
Tags: Canadian Dollar
ShareThis
