Inflation in Canada accelerated in April to 1.7% y/y from March’s print of 1.3%. The Canadian central bank’s core inflation gauge that strips eight most volatile items rose 2.2% y/y, as compared with the 2.1% y/y pace seen in March. The diminishing effect of lower energy prices is mainly aiding in accelerating inflation, said TD Economics in a research report.
On an annual basis, energy prices were down 3.2% in April; however, on a month-on-month basis, energy prices rose 3.8%. Gasoline prices were up 8.9% m/m last month. On the contrary, food price inflation that had been strong earlier has been easing. On a year-on-year basis, food prices accelerated 3.2%, but slowed from March’s 3.6%. Meanwhile, services inflation continues to be weak at 1.8% y/y.
Canada’s inflation accelerated on an annual basis; however, the month-on-month figures are easing, particularly seen in core inflation. This is because of subdued growth in prices of recreation, clothing, household operations and education, added TD Economics.
Overall, Canada’s inflation continues to be benign. Bank of Canada is keeping a close watch especially on core inflation. The Canadian economy continues to try and manage the adjustment to the collapse in oil price, while the central bank’s present stimulative monetary policy stance needs to be warranted, noted TD Economics.
