Canada’s annual inflation rate remained stuck at 1.2 per cent for the third consecutive month in October, continuing a level of stability that will give the Bank of Canada little reason to adjust ultra-low interest rates.
The consumer price index compiled by Statistics Canada was slightly higher than economists had anticipated, given that gasoline prices were known to have fallen during the month, but still at the low end of the central bank’s target range.
Core inflation — which measures underlying price pressures by excluding volatile items such as energy — stood at 1.3 per cent in October, also below expectations.
Statistics Canada reported gasoline prices were down 1.2 per cent from September — not as big a decline as anticipated and still 4.0 per cent higher than a year earlier.
The consensus estimate had been for the annual inflation rate to fall to 1.1 per cent, which would have been the lowest since June 2010 when it was 1.0 per cent.
Despite the low inflation rate and concerns about the global economy, Bank of Canada governor Mark Carney has stuck to saying that interest rates are likely to rise at some point.
The statements seem primarily to be a warning to consumers, who have racked up record-high personal debt during a period of prolonged low borrowing costs.
But the housing market has cooled of late and economists don’t expect Carney to make good on his cautionary language until very late in 2013 or more likely, sometime in 2014.
Overall, the Statistics Canada report issued Friday showed few trouble spots on the horizon for inflation, with most price increases coming in at a modest or moderating rates.
Meat cost 5.1 per cent more this October than last, yet food overall rose only two per cent. Property taxes hiked up 2.8 per cent, and homeowner replacement costs rose by 2.2 per cent.
However, mortgage interest costs decreased 2.6 per cent, natural gas fell 11.6 per cent, women’s clothing shed 3.8 per cent, video equipment were 13.2 per cent lower, and computer equipment and software cost 4.6 per cent less last month than they did a year ago.