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Canada’s Consumer Inflation Hits 5-Month High

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Canada’s Consumer Inflation Hits 5-Month High

Consumer prices in Canada rose at the fastest pace in five months, but still fell short of forecasts, as inflation continued to trend below historical standards.

The Consumer Price Index increased at an annual rate of 1.2 percent in December, after easing to 0.9 percent the previous month, Statistics Canada reported Friday. Economists at the Royal Bank of Canada called for 1.3 percent. On a monthly basis, consumer prices declined 0.2 percent. The so-called core measure, which excludes volatile goods such as food and energy, declined at a monthly rate of 0.4 percent.

Prices rose in six of the eight consumer categories. Transportation costs advanced at an annual rate of 2.1 percent, while shelter costs edged up 1.9 percent. The cost of rent increased 1.6 percent, while electricity rose 4.1 percent. Meanwhile, healthcare and related costs fell 0.4 percent in the 12 months to December.

Gasoline was the biggest factor driving up consumer prices in December, official data showed. Gasoline prices advanced at an annual rate of 4.7 percent, following a 0.4 percent gain in November.

The Bank of Canada has made inflation its primary concern, according to the latest rate decision released Wednesday. December marked the 20th consecutive month annual inflation was below the BOC’s target threshold of 2 percent.

According to the BOC’s official statement, “inflation is expected to remain well below target for some time, and therefore the downside risk to inflation has grown in importance.” At the same time, “The path for inflation is now expected to be lower than previously anticipated for most of the projection period.”

The BOC’s lending rate has been left unchanged since September 2010.

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