Canadian March Consumer Prices Rose 0.2%, Annual Increase Slows To 1

Owen Stevens
April 22, 2017

Measures of core prices also sagged, underlining Bank of Canada Governor Stephen Poloz's concern that excess slack remains in the economy.

Food prices rose 0.1% on the month with a 1.9% decline over the year.

The losses on Friday came in the immediate aftermath of the morning release of inflation data for March that showed price growth pulling away from the central bank's target.

A consensus of economists had predicted 1.8 per cent inflation for March, according to Thomson Reuters.

"It fits their narrative, and this notion there is no rush to hike", at the central bank, Jimmy Jean, a strategist in the fixed-income group at Desjardins Capital Markets in Montreal, said by phone.

"There is still a lot of spare capacity in the economy and until inflation picks up they'll probably stick with that narrative", he said in an interview. The governor also said the United States economy is further along than Canada's. These readings, which are created to strip away more volatile components, are closely watched by the Bank of Canada.

Food prices were down 1.9 percent on a year-over-year basis as Canadians paid less for food purchased in stores, while a decline in clothing costs also weighed on inflation.

"For this reason, we continue to expect core CPI to speed up in 2017 in line with the recent economic momentum", Arseneau wrote.

Food prices continued a downward trend, falling 2.1 per cent, led by lower prices for bakery and cereal products, and fresh fruit. Gasoline price gains moderated, with a 15.2% March gain following February's 23.1% jump. The broader, transportation price growth slowed to 4.6% from 6.6% in February.

Across Canada, Prince Edward Island was the only province that saw its annual inflation rate accelerate last month.

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