MNI 5 THINGS: Canada September CPI +2.2%, Below Expected>

By Courtney Tower 

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

data on Canadian inflation published Friday by Statistics Canada: 

     - Canadian inflation dipped far more than expected in September, on 

an annual basis. The 12-month headline inflation rate declined to 2.2% 

from +2.8% in August, and 3.0% in July, compared to expectations of 

+2.7%. On a monthly basis, CPI fell 0.4%, while analysts had expected a 

0.1% increase. This was the largest monthly drop since December 2017, as  

transitory pressures from gasoline and air transportation eased. The 

third quarter headline inflation rate increased to 2.7% on average 

year-over-year from 2.3% in the second quarter, compared to the Bank of 

Canada's projection of 2.5%. 

     - Measures of underlying inflation also eased in September. The 

Bank of Canada's preferred measures each declined by 0.1 percentage 

point from August, year-over-year: CPI-common dropped to 1.9%, 

CPI-median to 2.0%, and CPI-trim to 2.1%. 

     - Over the past year, prices were up in all major components of the 

CPI in September, but at slower paces. Statistics Canada noted that the 

transportation index increase of 3.9% was below its 7.2% increase in 

August, although it remained the largest contributor to inflation. It 

was down 16.6% on a monthly basis, the largest drop since -27.3% in 

January of 1988. 

     - Prices for goods rose 1.9% year-over-year. Durable goods rose 

more slowly on the year, by +0.2% in September from +1.1% in August. A 

main factor was the purchase of cars (+0.6% in September versus +2.3% in 

August). Prices for non-durables (+3.0% versus +3.8% in August) also 

increased at a more moderate pace. For instance, gasoline prices rose 

12.0% in the 12 months to September, against +19.9% in August. The base 

price had shifted, with the effects of Hurricane Harvey last year having 

by now dissipated. Services prices rose 2.5%, after a 3.1% gain in 

August. 

     - Apart from air transportation at +7.4%, the main upward 

contributors to the 12-month change were gasoline (+12.0%), restaurant 

food, mortgage interest and passenger vehicle insurance premiums. The 

main downward contributors were traveller accommodations and travel 

tours. Main upward contributors to the one-month change were tuition 

fees, men's and women's clothing, footwear and mortgage interest cost. 

Main downward contributors were air transportation, followed by 

traveller accommodation, car purchases, gasoline and travel tours. 

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

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