Canada’s annual inflation rate remained stuck at 1.2 per cent for the third consecutive month in October, continuing a level of stability that will give the Bank of Canada little reason to adjust interest rates.
The consumer price index compiled by Statistics Canada was slightly higher than economists had anticipated, given that gasoline prices were known to have fallen during the month, but still at the low end of the central bank’s target range.
The core inflation — which measures underlying price pressures by excluding volatile items such as energy — stood at 1.3 per cent in October, also below expectations.
Statistics Canada reported gasoline prices were down 1.2 per cent from September — not as big a decline as anticipated and still 4.0 per cent higher than a year earlier.
The consensus estimate had been for the annual inflation rate to fall to 1.1 per cent, which would have been the lowest since June 2010 when it was 1.0 per cent.
The central bank has set a target of keeping the inflation rate between 1.0 and 3.0 per cent.
Despite the low inflation rate and concerns about the global economy, Bank of Canada governor Mark Carney has stuck to saying that interest rates are likely to rise at some point.
The statements seem primarily to be a warning to consumers, who have racked up record-high personal debt during a period of prolonged low borrowing costs.
Overall, the Statistics Canada report issued Friday showed few trouble spots on the horizon for inflation, with most price increases coming in at a modest or moderating rates.
Meat cost 5.1 per cent more this October than last, yet food overall rose only two per cent. Property taxes hiked up 2.8 per cent, and homeowner replacement costs rose by 2.2 per cent.
However, mortgage interest costs decreased 2.6 per cent, natural gas fell 11.6 per cent, women’s clothing shed 3.8 per cent, video equipment were 13.2 per cent lower, and computer equipment and software cost 4.6 per cent less last month than they did a year ago.
On a month-to-month basis, prices rose 0.2 per cent, the same increase as in the two previous months, as property taxes, fresh fruit and automobiles were higher, while gasoline, dairy products and mortgage costs were slightly lower than in September.
Regionally, inflation was highest in Newfoundland and Labrador at 2.2 per cent and lowest in British Columbia, where the annual increase in consumer prices was only 0.5 per cent.