The USD/CAD currency pair fell to 1.1130 after the release of the stronger-than-expected inflation data in Canada, while disappointing retail figures were not able to stop loonie's appreciation.
According to a report from the Statistics Canada, the nation's consumer prices roe the most since June 2012 last month amid soaring shelter costs, hence alleviating some of the earlier concerns expressed by the central bank about subdued inflation. The CPI quickened to 1.5% in January, from 1.2% a month earlier, outpacing analysts' expectations for a 1.3% price growth. The less-volatile core measure, which excludes eight volatile products, accelerated up to 1.4% on a yearly basis, also surprising markets to the upside. The main upside pressure came from higher shelter costs that were 2.1% higher from a year ago, accelerating at the highest pace in a year.
Persistently low inflation has been one of the key concerns of the Canada's central bank, as during the last policy gathering they have put even more focus on weaker-than-expected inflation, while still maintaining its key refinancing rate at 1%. At the same time they have slashed central bank's inflation projections due to excess supply as well as heightened competition in the retail sector. This year core inflation is likely to stay at 1% in Q1 while projections for the second quarter have been revised to 1.2% from 1.5% expected earlier.
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