BoC Looking For Consistency Across Inflation Measures

Q: Some economists see the Bank’s inflation measures as misleading?

A: Macklem - We’re comfortable with our preferred measures of core inflation. We’ve been using this term of underlying inflation because it reflects what we’re seeing in a whole range of indicators rather than people getting fixated on one number. Yes, our preferred measures are important, but we also look at alternate measures (CPIxFE, CPIX) and the whole distribution of price changes and we’re see that still about 45% of the basket is rising about 3%, roughly double what is normal. That is one of the indicators that there is still some broad-based inflation in the system. We’re looking at all of those things, along with balance between demand and supply, wage growth, inflation expectations and corporate pricing behaviour [the usual factors from the recent guidance]. We want consistency across those indicators.