Inflation rate accelerates as oil slump impact fades

OTTAWA -- The country's annual inflation rate picked up the pace last month to 1.4 per cent as the influence of last year's oil-price plunge faded in the economic data.

See Full Article

Statistics Canada's November inflation reading, released Friday, accelerated from just one per cent in October.

But economists noted the inflationary increase had more to do with the waning impact of the late-2014 slide in energy prices than any surge in underlying inflationary pressure.

As evidence, Leslie Preston of TD Economics pointed to the energy category for November, which found prices had fallen 6.4 per cent compared to year-over-year drops of 13 per cent earlier in 2015.

"That's kind of a weight that's been weighing on headline inflation -- and that weight is getting lighter," Preston said Friday in an interview.

Meanwhile, the annual core inflation rate, which excludes some volatile items such as gasoline, slowed in last month when it rose by just two per cent. That's compared to an October increase of 2.1 per cent in the underlying core rate, which is closely followed by the Bank of Canada.

Still, headline inflation's 1.4-per-cent gain moved it a little closer to the central bank's ideal target of two per cent.

The federal statistical agency's latest consumer price index said higher prices for food and shelter were among the biggest contributors to the increase. Prices climbed in seven of the survey's eight major categories.

The index found that food prices were up 3.4 per cent compared to a year earlier, thanks in large part to the higher costs of meat and fresh vegetables. The category of fresh or frozen meat, excluding poultry, was up six per cent, while beef alone climbed 8.1 per cent.

The report says the cost of fresh vegetables rose by 10.9 per cent following big, year-over-year increases in the prices of tomatoes and lettuce.

Since the country is a big goods importer, many of the price increases were largely due to the effects of the slumping Canadian dollar, Preston said.

This week, the loonie ducked below 72 cents US for the first time since May 2004.

Preston expects the Bank of Canada to stand pat on its benchmark interest rate at its next policy meeting in January. TD doesn't predict governor Stephen Poloz to move the rate for close to two years as the country's modest growth heads in the right direction, she added.

Poloz cut the rate twice in 2015 to ease some of the negative economic impact of the oil-price shock.

On the flip side, lower prices in the overall transportation category, which fell 1.1 per cent, put downward pressure on inflation. A closer look at the data shows that gasoline prices fell last month by 10.6 per cent compared to a year earlier.

World energy prices have dipped in recent weeks, which could continue to push down on inflation. But experts predict the upward price momentum of the loonie's slump to help offset that pressure.

"The sagging loonie will simply add to the upswing, countering any dampening impact from the latest slide in energy prices," BMO chief economist Doug Porter wrote in a note to clients Friday. "The days of ultra-low headline inflation readings are now in the past, and we will see it grind back toward two per cent in the next few months."

Statistics Canada said consumer prices rose in every province last month compared to the year before.

On a seasonally adjusted month-over-month basis, the consumer price index crept up 0.2 per cent in November, which matched October's increase.

The agency also released October data for wholesale trade, which fell 0.6 per cent to $54.7 billion -- its fourth-straight monthly drop.

It said lower trade figures were recorded in four areas that, when combined, represent 64 per cent of all sales.

Sales fell by three per cent to $10.5 billion in the food, beverage and tobacco category -- its third decrease in four months. The category of motor vehicle and parts registered a 2.1 per cent drop to $9.5 billion, its fourth-straight tumble.



Advertisements

Latest Economic News

  • Outgoing Sears Canada employees try to stop $7.6M in bonuses for execs

    Economic CTV News
    Former and current employees of Sears Canada have filed a legal motion in an attempt to stop dozens of company executives from splitting $7.6 million in retention bonuses while many laid-off workers miss out on severance payments. Source
  • Adidas to sell CCM to Toronto-based firm for $110 million US

    Economic CBC News
    German sportswear manufacturer Adidas has announced an agreement to sell its CCM hockey-equipment subsidiary to a Canadian firm for $110 million US. The multinational said Thursday it will sell CCM to Toronto-based Birch Hill Equity Partners, with the majority of the transaction to be paid in cash. Source
  • White House and congressional leaders scrap import-based tax

    Economic CTV News
    WASHINGTON -- Trump administration officials and congressional leaders are no longer considering an import-based tax system to rewrite the tax code, which was welcomed by Foreign Affairs Minister Chrystia Freeland. A border tax system had been contemplated to lower rates without blowing a hole in the American budget. Source
  • Amazon profit slumps 77% as costs surge, shares fall

    Economic CBC News
    (Reuters) Amazon.com Inc. reported a 77 per cent slump in quarterly profit as the company invests heavily in areas such as video content and in fast-growing economies such as India. The company's shares, already up nearly 41 per cent this year, were down 2.6 per cent at $1,019 US in after-hours trading on Thursday. Source
  • Starbucks to shutter all Teavana stores as sales disappoint

    Economic CTV News
    NEW YORK -- Starbucks plans to shutter all its Teavana stores as it seeks to improve its financial performance. The company said Thursday it will close all 379 Teavana locations over the coming year. Source
  • Liberals set up fast-track system for infrastructure bank approvals

    Economic CTV News
    OTTAWA -- The federal infrastructure bank is many months away from opening its doors, but Liberals have given a group of civil servants the power to help fast-track approval of projects for private funding well in advance. Source
  • Branson sells majority stake in Virgin Atlantic in broader tie-up

    Economic CTV News
    LONDON -- Richard Branson is selling his majority stake in Virgin Atlantic. The billionaire entrepreneur's Virgin group announced Thursday that he was selling a 31 per cent stake to Air France-KLM for 220 million pounds ($287 million). Source
  • U.S. Republican leaders announce end of border tax proposal

    Economic CBC News
    A Republican proposal in the House of Representatives to institute a border tax on imported items has been killed, party leaders said on Thursday, saying they did so as part of a tax overhaul deal struck between congressional and administration negotiators. Source
  • Twitter shares take beating as user growth stalls

    Economic CTV News
    Twitter shares took a pounding Thursday after the company reported stalled growth in a key measure of its user base, sparking fresh fears over the future of the social network. Twitter, which has been struggling to keep pace in the fast-moving world of social media, reported a net loss of $116 million in the second quarter, slightly wider than its $107 million loss a year ago. Source
  • Prime spot: Amazon's Jeff Bezos briefly becomes richest man in the world

    Economic CTV News
    Amazon founder Jeff Bezos briefly snagged the crown of “richest person in the world” on Thursday from Bill Gates, in Forbes’ realtime rankings of the wealthiest billionaires on the planet. Bezos’ net worth spiked to US$90.5 billion Thursday morning, putting him just ahead of the Microsoft founder’s $90-billion fortune. Source