MNI DATA IMPACT: Canada Jan CPI +1.0% YOY, +0.6% MOM

Canadian consumer price inflation quickened to 1.0% in January from 0.7% in December, reflecting higher prices for cars and gasoline along with an upward distortion from travel tours that remain suspended due to the pandemic, the federal statistics office said Wednesday.

Prices rose 0.6% on the month, Statistics Canada said. Both the monthly and the annual pace were a tenth of a percentage point greater than the economist consensus.

The average of the three core inflation indexes tracked by the Bank of Canada also nudged up to 1.5% in January from 1.4% in December.

The BOC projects average inflation of 0.9% this quarter and a surge in the second quarter on gasoline prices compared to last year's weakness. Prices are not expected to stabilize at the 2% target until 2023.

Signs of inflation are already building. Gasoline prices were up 6.1% in January from December, and prices for vehicles rose 2.9% from a year ago.

Inflation has lagged the BOC's 2% target since February 2020. Statistics Canada warned the 12-month index should be interpreted with caution because of difficulties pricing travel tours that are suspended due to health restrictions-- officially that component showed a 31% price increase from a year earlier.