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

  • Wages, full-time work sliding for young Canadians, StatsCan says

    Economic CBC News
    Unemployment rates among young Canadians have held relatively steady when compared with the mid-1970s, but the proportion of full-time or permanent jobs has changed sharply over that time, says Statistics Canada. In a study released Monday that looks at changes in the youth labour market from 1976 to 2015, Statistics Canada said the unemployment rate for the 15 to 24 age group averaged 13.2 per cent in 2015, slightly higher than the rate of 12.4 per cent seen in 1976. Source
  • Federal, Ontario governments talking 'investments' with Canada's big automakers

    Economic CTV News
    OTTAWA - The federal and Ontario governments are actively discussing major investments in the big automakers. Following the recent conclusion of labour negotiations, the auto companies are now in talks with the governments about investment opportunities in a sector that is a critical component of the Ontario and Canadian economies. Source
  • Postal workers ratify agreement reached last summer with Canada Post

    Economic CTV News
    MONTREAL -- A union spokeswoman says members of the Canadian Union of Postal Workers have ratified the tentative agreement reached last summer with Canada Post. Lise-Lyne Gelineau, president of the union's Montreal section, tells The Canadian Press rural and suburban mail carriers voted 55 per cent in favour of the new contract, while urban postal workers voted 63 per cent in favour. Source
  • Global trade more important than ever, Chrystia Freeland tells Toronto audience

    Economic CBC News
    Ottawa is more in favour than ever of global trade and signing free trade amendments, despite recent moves toward protectionism in other countries, International Trade Minister Chrystia Freeland told a Toronto business audience on Monday. Speaking to the Toronto Board of Trade at a luncheon, Freeland said is "so proud" to be representing Canada on the world stage, because it is "the country that is most clearly bucking the trend" toward protectionism and closed borders. Source
  • Trump not saying what he'll do about Dakota Access pipeline

    Economic CTV News
    CANNON BALL, N.D. -- Protesters who celebrated a major victory in their push to reroute the Dakota Access oil pipeline vowed to remain camped on federal land as they wait to find out whether President-elect Donald Trump might seek to overturn a decision that delayed the $3.8 billion project. Source
  • Electric vehicle charging stations coming to 25 Ontario Canadian Tire locations

    Economic CTV News
    ETOBICOKE, Ont. - Electric vehicle charging stations are being added to 25 Canadian Tire Gas+ locations across Ontario. AddEnergie Technologies says the stations, which start rolling out early next year, join the 2,500 stations along its FLO Canadian charging network. Source
  • International trade minister's announcement and news conference LIVE

    Economic CBC News
    Trevor Noah on race, comedy and politics 12:14 Daily Show host talks to CBC's Wendy Mesley about U.S. race relations, his childhood under apartheid and his controversial interview with pundit Tomi Lahren Source
  • StatCan study highlights drop in wage, job quality for young workers

    Economic CTV News
    OTTAWA - A new study from Statistics Canada says young people have seen their job quality decline over the last four decades, even as the unemployment rate has remained virtually unchanged. In a report released today, the national statistics office says fewer young Canadians, who are not full-time students, are working in full-time jobs today than in 1976, a result driven mainly by the rise of part-time work rather than increases in unemployment rates or decreases in labour force…
  • Second Cup signs $8M loan deal

    Economic CBC News
    The Second Cup Ltd. has signed a deal for a four-year, $8-million secured term loan from an affiliate of Serruya Private Equity following a review of its strategic options. The company says proceeds from the loan will be used to repay its existing $6-million credit facility and for general corporate purposes. Source
  • Amazon Go store is checkout free

    Economic CTV News
    NEW YORK -- Amazon is testing a grocery store model in Seattle that works without checkout lines. Called Amazon Go, shoppers scan their Amazon app when they enter the store, and then sensors register items that shoppers pick up and automatically charge them to the Amazon app. Source