MNI 5 THINGS:Canada Inflation Seen Reaching Target in February

By Yali N'Diaye

     OTTAWA (MNI) - The following are key points to watch for in Statistics

Canada's February Consumer Price Index to be released Friday:

     - Analysts in a MNI survey expect monthly CPI to rise 0.5% in February,

down from 0.7% in January, for a 12-month increase of 2.0%, up from 1.7% in

January.

     - It will be key to continue to watch the BOC's preferred measures of

underlying inflation as excess capacity continues to be absorbed, especially in

the labor market. The range of core measures edged up to 1.8%-1.9% in January

from 1.6%-1.9% in December. CPI-common picked up to 1.8% from 1.6%, the largest

gain since April 2012. CPI-trim and CPI-median were steady at 1.8% and 1.9%,

respectively. Base effects could bring the core measures slightly higher.

     - On a monthly basis, lower gasoline prices are expected to contribute an

inflation slowdown in February. Gasoline was the largest upward monthly

contributor in January, along with telephone services.

     - On a 12-month basis, higher energy prices should help bring total

inflation to target, or even above, which would make it harder for the BOC to

justify its caution, especially at a time NAFTA renegotiations are taking a more

positive turn as the U.S. reportedly softened its demands related to the

all-important auto sector.

     - Analysts also pointed out that February is a strong seasonal month for

inflation, if not the strongest, which could translate into a flat or near-flat

seasonally adjusted index in February following a 0.5% gain in January.

--MNI Ottawa Bureau; +1 613 869-0916; email: yali.ndiaye@marketnews.com

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