Canada January inflation rate rises 1.4 percent

February 27, 2019

OTTAWA (Reuters) – Canada’s annual inflation rate in January was 1.4 percent, down from a 2.0 percent increase in December, as energy costs declined and growth in the price of services slowed, Statistics Canada data indicated on Wednesday.

Analysts in a Reuters poll had forecast the rate would be 1.5 percent. The step back from the Bank of Canada’s 2.0 percent target underscores market expectations that imminent interest rate hikes are off the table.

The Bank of Canada has raised rates five times since July 2017, though Governor Stephen Poloz indicated last week that while interest rates need to move up into a neutral range, he was in no rush to resume monetary tightening.

Energy costs declined 6.9 percent in January compared to the previous year, driven by a 14.2 percent fall in gasoline prices.

Service costs were up 2.7 percent, though down from 3.5 percent in December as transitory pressures eased, Statistics Canada said.

The Bank of Canada’s three core inflation measures were unchanged, with CPI common, which the bank says is the best gauge of the economy’s underperformance, at 1.9 percent.

(Reporting by Julie Gordon and Dale Smith in Ottawa; Editing by Bernadette Baum)

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