canadian cpi review apr
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- Gas prices strengthen from carbon pricing

LONDON, 15 May (LS NEWS) - Carbon levies that have pushed up gasoline prices in six provinces helped Canada’s April inflation rate tick up to 2.0pct.


Canada’s annual inflation rate edged up to 2.0pct in April from 1.9pct in March, hitting the Bank of Canada’s inflation target for the first time since December, Statistics Canada data indicated on Wednesday.


Prices gained 0.4pct from the previous month, which was in line with forecasts, similar to the year-on-year reading.


The average of the three gauges for core inflation, which are considered better measures of underlying price pressures by omitting volatile items like gasoline, slowed slightly to 1.9pct in April, down from 2pct the previous month.


CPI common, the best indicator of the economy’s underperformance according to the BoC was at 1.8pct, the same print as the prior month. CPI median, the median inflation rate across all CPI components was at 1.9pct, whilst CPI trim, which excludes upside and downside outliers, was at 2pct.


The bank recently dropped its hawkish bias in favour of a neutral outlook and this position is unlikely to put any immediate pressure on Governor Poloz. Analysts at TD Securities said the measures of core inflation are “consistent with an economy running with excess capacity. This release will do little to sway convictions at the Bank of Canada where the primary focus is the near-term growth outlook.”


Prices are expected to remain on target as energy prices continue to rebound. Average gasoline prices have risen, and domestic price pressures could also ratchet up due to strength in the labour market and the upward trending wage growth feeding through into household spending.


The key level to watch in USD/CAD remains 1.3520, the April high and a level which has failed to break on a number of occasions.


--Jamie Dutta

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