Canadian Consumer Price Inflation – November 18, 2016

Canadian inflation, as measured by the Consumer Price Index (CPI),  rose just 1.5 per year-over-year in October. That is a modest uptick from 1.3 per cent in the twelve months to September.  The Bank of Canada’s core measure of inflation, which excludes volatile components like food and gasoline, rose 1.7 per cent.   In BC, provincial consumer price inflation was 2.1 per cent in the 12 months to October. 

Inflation in Canada has trended lower following several months above the Bank’s 2 per cent target. While the Canadian economy posted very strong growth in the third quarter, much of that growth is the result of bouncing back from a wild-fire induced contraction in the second quarter. With the economy returning to a more moderate rate of growth, there is very little pressure on inflation currently and events in the United States have injected a fair amount of uncertainty into the outlook. Those factors leave the door open for a further Bank of Canada rate-cut in coming months, though our baseline forecast remains for the Bank to be on hold until 2018.