Loonie Drops Amid Increasing Inflation Rate
Posted January 20, 2010 10:40 am.
This article is more than 5 years old.
Canada’s dollar took a hit Wednesday amid news the inflation rate rose again, for the third straight month.
The Loonie suffered its biggest one-day decline since October, down more than one-and-a-half cents in morning trading to 95.52 cents (US). The inflation rate played a part, as did the fact that the U.S. dollar is gaining momentum against the Euro.
Canada’s annual inflation rate rose to 1.3 per cent in December and despite the increases, the Bank of Canada insists the nation is a ways off from facing an inflation problem.
Statistics Canada blames the fluctuating cost of gasoline for the rise in inflation in its monthly report. The cost of filling up hit record highs in the summer of 2008 then dropped dramatically in the last half of that year. Gas cost just over 25 per cent more last month than it did a year earlier.
The report notes that 2009 was stable despite the last three months when energy prices pushed the consumer price index higher.
“Energy prices exerted the most significant downward pressure on the CPI in 2009,” Stats Can said.
“Overall, prices for energy were 13.5 per cent lower in 2009. Gasoline prices fell 17.5 per cent in 2009, while prices for natural gas and fuel oil and other fuels dropped 20.1 per cent and 29.9 per cent, respectively.”
Stats Can recorded increases in six areas in December, including food prices (up 1.7 per cent); household operations (up 1.9 per cent); health and personal care; recreation; education and reading materials and alcohol and tobacco. Energy prices led the pack.
The report noted prices in some areas were actually lower: the cost of shelter went down 1.7 per cent, clothing and footwear and vehicles.
