Canadian headline inflation accelerates in November

Canada’s headline inflation accelerated in November. The consumer price index rose from 1.4 percent to 2.1 percent, slightly above expectations of 2 percent. On a sequential basis, prices rose a solid 0.5 percent. Price gains were comparatively broad based, with all major categories except health and personal care rising in the month and accelerating on a year-on-year basis.

Energy prices recovered soundly after pulling back in October. Energy prices rose 7.6 percent year-on-year, driven by gasoline prices, which rose 19.6 percent. Prices of food and beverage were up 0.2 percent sequentially and rose 1.6 percent.

Meanwhile, core prices rose soundly. CPI-trim accelerated to 1.8 percent, while CPI-median rose to 1.9 percent. The CPI-common measure was the hold out, dropping to 1.5 percent from 1.6 percent in October.

The widespread gain in November echoes the trends seen in the remainder of the economy and implies that the Philip’s curve relationship between inflation and economic slack still has some explanatory power, noted TD Economics.

“With economic momentum appearing to hold up into the fourth quarter (reinforced in today's retail sales report), the case for the Bank of Canada to follow the Federal Reserve in hiking interest rates is building. Don't be surprised if it comes sooner rather than later”, added TD Economics.

At 18:00 GMT the FxWirePro's Hourly Strength Index of Canadian Dollar was highly bullish at 153.694, while the FxWirePro's Hourly Strength Index of US Dollar was neutral at -26.8339. For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex

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