Canada: Annual pace of inflation down in February

February saw Canada’s annual inflation rate fall slightly, beating expectations that January’s 2.1% increase would continue into February 2017. According to Statistics Canada, the consumer price index (CPI) experienced a year-on-year increase of 2.0% in February, despite prices rising for seven of the eight main categories. Food costs were the only component to decline, offsetting rises elsewhere, with a 2.3% decrease. When excluding rising gasoline prices, a major factor behind recent inflation, CPI works out at 1.3%.

According to Statistics Canada, the consumer price index (CPI) experienced a year-on-year increase of 2.0% in February, despite prices rising for seven of the eight main categories.

The inflation rate has remained steady around the 2% mark over the past few months, supporting the Bank of Canada’s decision to exercise caution around any increase in interest rates. Lawrence Schembri, Deputy Governor of the Bank of Canada, voiced concerns that, despite good economic progress, there is slack in the economy and overall business investment has been slow. Economists believe that the Bank of Canada will hold its key interest rate for the foreseeable future, which has been set at 0.5% since July 2015 when diminishing oil prices were affecting growth.

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