Canada's inflation rate slowed to 2.1 percent in December from 2.4 percent in November, hitting the Bank of Canada's target and cementing views that the bank will leave interest rates unchanged. Statistics Canada said cheaper computers, natural gas and auto insurance rates moderated the impact of higher gasoline prices on consumer prices over the 12 months to December.
Core inflation, which strips out such volatile items as food and energy, edged up to 1.7 percent in the year to December, from 1.6 percent in the 12 months to November, Statscan said on Wednesday.
Analysts had forecast that the annual rate of inflation would slow to 2.3 percent in December and that core inflation would remain unchanged at 1.6 percent. But they said the actual figures did little to change their overall economic forecasts.
"I think it was largely a benign report," said Doug Porter, senior economist at BMO Nesbitt Burns.
"It's certainly not going to have any impact on the central bank's decision to stand pat (on rates) next week, and unless we see core inflation keep grinding higher in the months ahead, it's still under their 2 percent target."
The Canadian dollar eased slightly after the figures were released, sliding to C$1.2202 to the US dollar, or 81.95 US cents, from C$1.2180 to the US dollar, or 82.10 US cents, an hour before the report was made public.
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