Canadian headline inflation accelerates above expectations in January

The Canadian headline inflation accelerated a bit above expectations in January. On a year-on-year basis, the consumer price inflation came in at 2.4 percent, as compared with the expectations of 2.3 percent. On a month-on-month basis, consumer prices rose 0.1 percent, decelerating from December’s 0.4 percent.

Energy prices mainly drove the headline rate. Gasoline prices rose to 11.2 percent year-on-year, accelerating from December’s 7.2 percent. The introduction of carbon pricing in Alberta added to the gain. Stripping gasoline, inflation stayed stable at 2 percent.

The Bank of Canada’s core inflation measure came in mixed, but on average edged lower to 2 percent in January. CPI-common dropped to 1.8 percent. Meanwhile, CPI-median remained the same at 2.2 percent and CPI-trim rose to 2.1 percent.

“The positive contribution to inflation from higher oil prices will certainly unwind in February, bringing the headline down with it”, said TD Economics in a research report.