- Derek Holt, Scotiabank economist
Canada's inflation cooled more than expected in September amid a steep fall in gasoline prices. The consumer price index climbed 1% last month from a year earlier, marking the tenth consecutive month it has been below the Bank of Canada's 2% inflation target, Statistics Canada said. Gasoline prices plummeted by 18.8% in the 12 months to September following the 12.6% plunge in August. In the prior two months, the gauge rose 1.3%. The core inflation, which excludes volatile components such as gasoline, tobacco and mortgage interest remained at 2.1%. Weaker price growth is likely to build pressure on the Canadian Dollar, pushing it downward versus the US namesake. Yet, the effects of the lower Loonie are continuing to support the sectors included in the core measure, such as food, which rose 3.5% in September over the past year. Measured on a monthly basis, total inflation slid 0.2% in September and the core rate climbed 0.2%.
Last week the Bank of Canada said slack in the economy will keep inflation from reaching the central bank's 2% target until around mid-2017. The BoC expected the underlying inflation rate to be around 1.5% to 1.7%.
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