MNI:Canada January CPI Dips To 1.7% Y/Y, But Tops Expectations>

By Courtney Tower 

     OTTAWA (MNI) - Canadian inflation dropped to 1.7% at an annual rate 

in January from 1.9% in December, Statistics Canada reported Friday. 

     On a monthly basis, CPI rose 0.7% in January, the largest increase 

since January 2017. 

     On a seasonally adjusted basis, CPI rose 0.5% on the month, after 

edging up 0.1% in December. 

     Analysts surveyed by MNI had expected annual inflation of 1.5% in 

January and a 0.5% increase month-over-month. 

     --PRICES UP OVERALL 

     For the year, prices were up in all the eight major components, 

with the transportation (+3.2%) and shelter (+1.4%) indexes contributing 

the most to the annual gain. Excluding energy, the CPI increased 1.7% on 

the year as it had in December. Energy rose 2.4%. 

     For the three measures of core inflation preferred by the Bank of 

Canada, CPI-common was up 1.8% year-over-year from 1.6% in December, the 

largest gain since April 2012. 

     CPI-median and CPI-trim measures remained the same as in December, 

at 1.9% and 1.8%, respectively. 

     --GOODS, SERVICES RISE 

     Prices for goods overall rose to 1.1% in January and prices for 

services rose more, at 2.2%. 

     Consumers paid 3.2% more for transportation in January at the 

annual rate, following the 4.9% increase in December. Passenger vehicle 

prices increased less year-over-year in January (+1.4%) than in December 

(+3.7%), while gasoline prices rose 7.8% after gaining 12.2% in 

December. 

     Food prices were 2.3% higher on the year (+2.0% in December), the 

largest annual gain since April 2016. That was led by higher restaurant 

prices. There were higher year-over-year prices, as well for vegetables 

and fresh fruit. 

     Household operations, furnishings and equipment rose year-over-year 

in January by 0.8% after falling by 0.3% in December. 

     Consumer prices rose less on an annual basis in eight of the 10 

provinces in January from December. In British Columbia (+2.1%) and in 

Ontario (+1.8%), the increases were higher in January than in December. 

     --MONTHLY BASKET INCREASES 

     For the monthly CPI, seasonally adjusted, all eight major 

components increased, contributing to the 0.5% gain. The largest 

increase was for household operations, furnishings and equipment 

(+1.2%). 

     On the year, not seasonally adjusted all items excluding energy 

were up 1.7% from +0.6% in December. All items excluding food and 

energy were up 1.5% from +0.5% in December. 

     Looking through the data's pullback in January for the annual 

rate, the Royal Bank of Canada's Paul Ferley has written that "most 

measures of underlying price growth have been rising at a 2% 

annualized rate or better over the last six months. Assuming those 

trends are sustained going forward, the pullback ... should be 

reversed over the next few months."

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

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