"We don't expect enough inflationary pressures to be generated to pull the Bank of Canada off the sidelines until the end of 2014"
-Leslie Preston, Holt and Toronto-Dominion Bank economist
On Friday Statistics Canada published inflation data, saying consumer prices are approaching the bottom of the Bank of Canada target band, due to lower costs for mortgage interest and prescription drugs. Figures showed the nation's CPO advanced 1.1% in September from a year earlier, following previous month's 1.1% gain, widely meeting analysts expectations. The core rate, which stripes out eight volatile products, also remained unchanged at 1.3%. The main downside pressure came from mortgage costs , which decreased 3.0%. The main contributors for growth, however, came from rent, with prices soaring 1.6% from year ago, while notable increases were also noted in natural gas prices, which soared 12.6%.
The nation has been struggling from weak inflationary pressure for over a year now, as prices remained below the 2% target level. Earlier in September Canadian policymakers refrained from any additional stimulus, leaving the overnight interest rate at 1%, and making no adjustments to its policy since September 2010. Moreover, the majority of economists do not expect the Bank of Canada to hike rates until late next year. While there are no signals of support from the government, intense competition in retail sector, low mortgage rates and weak growth in wages are conspiring to keep consumer prices very soft.
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