MNI 5 THINGS:Canada Inflation Dips to 1.4% Y/Y; Core Resilient>

By Yali N'Diaye

     OTTAWA (MNI) - The following are the key points from the January 

data on the Canadian Consumer Price Index released Wednesday by 

Statistics Canada: 

     - Headline unadjusted CPI edged up 0.1% in January, while analysts 

in a MNI survey had expected it to remain unchanged, following a 0.1% 

decrease in December. 

     - Of the eight major categories, three posted declines on the 

month, including transportation (-1.0%), which was the lone major 

component to also post a decrease on the year (-0.4%), affected by gas 

prices. Gasoline prices fell 3.1% from December, and were the second 

largest downward contributor to monthly inflation after air 

transportation (-16.0%). Overall energy was down 1.1% on the month and 

CPI excluding energy was up 0.2%. Goods prices recovered 0.3% in 

January, while services edged down 0.1%. 

     - On a 12-month basis, inflation dipped to 1.4% from 2.0% in 

December, in line with analysts' expectations. "Transitory" upward 

pressures from air transportation and travel tour indexes during the 

December travel season, as well as from telephone services, dissipated 

in January. Overall services prices rose 2.7% year-over-year, following 

a 3.5% gain in December. Goods prices fell 0.2% year-over-year. Gasoline 

prices fell 14.2%, the largest 12-month drop since October 2015. In 

fact, CPI excluding gasoline rose 2.1%, with all components posting 

increases except transportation. Gasoline was the largest downward 

contributor to year-over-year inflation, while mortgage interest cost 

(+7.8%) was the largest upward contributor. 

     - The Bank of Canada is likely to look through the inflation dip, 

especially since its preferred measures of core inflation remained close 

to the 2% target. The average of CPI-common, CPI-median and CPI-trim was 

unchanged at 1.9% year-over-year for the third consecutive month, 

showing resilience despite slower growth and lower energy prices. The 

BOC doesn't expect headline inflation to come back to 2% until the 

fourth quarter of 2019. 

     - On a seasonally adjusted basis, headline inflation edged down 

0.1% in January after rising 0.2% in December. Excluding food and 

energy, it was down 0.2% month the month. 

--MNI Ottawa Bureau; email: yali.ndiaye@marketnews.com 

[TOPICS: M$C$$$,MACDS$]