- Leslie Preston, TD Bank economist
Canada's annual inflation rate accelerated in January to its highest level since November 2014, led by food prices and the first increase in the cost of gasoline in over a year, according to Statistics Canada. The Canadian Consumer Price Index advanced 2% over the past year in January, hitting the quickest pace in over a year, after posting 1.6% in December. After being suppressed by a plunge in energy prices, gasoline prices increased 2.1%, the first annual gain since October 2014. Nonetheless, prices still fell 6% on a monthly basis. Food costs advanced 4% as consumers paid 18.2% more for fresh vegetables. The rise in food prices suggests consumers were feeling the effect of a weaker Canadian Dollar, which has been hit hard by falling oil prices. Overall, prices were higher in seven of the eight major components of the consumer price index. The clothing and footwear segment was the only component to decrease, and was down an annual 0.3%.
The annual core inflation rate, which strips out the prices of some volatile items and is monitored by the Bank of Canada, was also 2.0%, slightly higher than expected and up from 1.9% in the previous month. Earlier in January, the central bank stated that price growth is developing as expected and risks to the inflation outlook remain roughly balanced.
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