MNI 5 THINGS: Canada Oct CPI Tops Expectations, Core Ticks Up>

By Yali N'Diaye

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

data on the Canadian Consumer Price Index released Friday by Statistics 

Canada: 

     - Headline unadjusted CPI rose 0.3% in October, while analysts in a 

MNI survey had expected a 0.1% increase, following a 0.1% decline in 

September. 

     - The top upward contributors to the monthly increase were cars 

(+2.6%), telephone services (+3.1%), as well as airfares (+4.6%). As 

expected, lower gasoline prices (-3.2%) were one of the top two downward 

contributors, after traveller accommodation. Among the eight main 

categories, just two posted declines on the month: food and recreation, 

education and reading. Shelter was up 0.4%, with mortgage interest costs 

continuing to rise at a steady monthly pace of 0.6%. Services prices 

overall rose 0.3% on the month, while goods were up 0.2%. Energy fell 

1.6%, the largest drop in a year. CPI excluding energy rose 0.5%. 

     - On a 12-month basis, inflation accelerated to 2.4% from 2.2% in 

September, while analysts in a MNI survey had expected a 2.2% gain. 

Gasoline (+12.0%) and mortgage interest costs (+7.0%, the largest gain 

since Oct. 2008), were the top two upward contributors. Shelter prices 

overall rose 2.5% year-over-year, contributing the most to the 12-month 

gains along with transportation. 

     - While headline inflation was above the Bank of Canada's 2.0% 

mid-range target, the central bank continues to look through gasoline 

and airfare effects, focusing on core inflation readings. Its three 

preferred measures ticked up in October to a range of 1.9%-2.1% from 

1.9%-2.0% in September. CPI-median and CPI-trim both edged up 0.1 

percentage point to 2.0% and 2.1%, respectively. CPI-common was steady 

at 1.9%. With such numbers, the BOC is likely to stick to its view that 

core inflation remains around 2.0%, reflecting an economy operating 

close to capacity. However, it will be interesting to see how it factors 

in the increasingly persistent decline in oil prices when it makes its 

next announcement on Dec. 5. 

     - On a seasonally adjusted basis, CPI rose 0.3% on the month, after 

declining 0.1% in September. It was up 0.4% excluding food and energy, 

following a 0.1% decrease the previous month. 

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

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