Canadian headline consumer price inflation slows slightly in April

Canadian headline consumer price inflation slowed a bit in April. On a year-on-year basis, consumer prices rose 2.2 percent, as compared with 2.3 percent in March and consensus expectations of a call for 2.3 percent. On a sequential basis, prices rose 0.1 percent. Category wise, the biggest sequential gainers were clothing and shoes, alcohol and tobacco, and household operations. Meanwhile, the ledger, recreation and education prices dropped 1.5 percent, health and personal care prices dropped 0.5 percent, while transportation prices fell 0.2 percent.

Still, most categories rose year-on-year, led by energy, which rose 6.3 percent. Only recreation and education prices dropped year-on-year, falling 0.2 percent. Two of three of the Bank of Canada’s core price measures rose in the month, with CPI-Trim and CPI-Median rising to 2.1 percent. CPI-common stayed the same at 1.9 percent.

Canadian inflation remains close to the BoC’s target of 2 percent; however, it shoes some signs of breaking much higher, noted TD Economics in a research report. Increased energy prices might pull up the headline measure over the next few months, but core rate might remain comparatively well contained.

“With a relatively benign inflation outlook, the Bank of Canada will remain focused on the risks to the Canadian economy, namely headwinds to growth from a slowing housing market and uncertainty around NAFTA, which, as of today, looks to remain a thorn in the side of policy makers for some time to come”, added TD Economics.

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