Date: November 23, 2010
Canadian Consumer Price Index, September 2010 Results
Source: Statistics Canada
Link to Release: http://www.statcan.gc.ca/daily-quotidien/101123/dq101123a-eng.htm
Summary: Canada’s Consumer Price Index (CPI), the key measure of price growth for consumer goods and services, jumped 2.4 per cent in October following a 1.9 per cent increase in September. Once again, the rise in prices was driven largely by energy costs, which advanced 9.1 per cent compared to October of last year. With energy prices and other volatile products stripped out, the Bank of Canada’s Core CPI rose by 1.8 per cent.
Analysis: The rate of inflation in October was higher than expected. Both the All-Items and Core indices were above of the Bank of Canada forecasts for the fourth quarter of 2010. The Bank of Canada, through its decisions to raise or lower its policy interest rate (the Target for the Overnight Lending Rate), seeks to keep the annual rate of inflation between one and three percent, ideally averaging out at two per cent over the longer term. While the October result was above expectations, slower growth in the Canadian economy in the second half of 2010 still supports the consensus view that the Bank of Canada will hold off on raising its policy rate at least until the spring of 2011. However, if the rate of inflation for November and December remains above the Bank’s expectations this view may change.
Source: Toronto Real Estate Board