Things cost only slightly more last month, according to figures released this morning by Statistics Canada.
The unadjusted all-items Canadian CPI index edged up by 0.2% in September with the annual inflation rate holding at 1.2%. On a seasonally-adjusted basis, consumer prices also rose 0.2%. The Bank of Canada's core measure posted a 0.2% gain on an unadjusted basis and was unchanged on a seasonally adjusted basis. The annual core inflation rate dropped to 1.3% from 1.6% in August, the slowest pace of increase since June 2011.
In September, prices for gasoline, clothing, and tuition fees increased relative to August. The 3.7% rise in tuition fees was slightly lower than the 4.2% increase last September. Partially offsetting these increases were lower prices for fresh vegetables and fruit, traveler accommodation and mortgage interest costs. Clothing and footwear prices posted the largest monthly increase rising 4.2% however this followed a mild increase in August and three consecutive months of hefty declines in previous months.
Relative to a year ago, clothing and footwear prices were 1.8% lower. Transportation costs, rose 0.6% in the month although were only 1.6% higher than in September 2011. Gasoline prices posted a 2.1% gain in the month to be 4.7% higher than a year earlier. Food prices, fell by 1.1% in September led by falling prices for fresh vegetables and fruit and meat and were 1.6% higher than a year earlier.
Canada's inflation rate averaged a mild 1.2% in the third quarter, the slowest pace of increase since late 2009. The Bank of Canada's measure of the core inflation rate also slowed to 1.5% from the 2.1% average recorded in the first half of the year. The drop in the core rate was more aggressive than the Bank forecast in its July Monetary Policy Report.
According to analysts from RBC Economics, "against this benign inflation backdrop and with the economy growing at rates that are slightly shy of its potential, there is little pressure for the Bank of Canada to adjust the amount of policy stimulus in the near term. Also weighing into the Bank's assessment of the level of policy support that is consistent with achieving the 2% inflation target over the medium term is the high level of uncertainty about the global economic outlook."
The bank continues, "this was the crux of (Bank of Canada) Governor (Mark) Carney's speech earlier this week in which he suggested that the uncertain global backdrop was not only weighing on demand for Canadian exports but also seeping into Canadian companies sales expectations and investment plans. This statement suggests that at next week's policy meeting the policy rate will remain at a stimulative 1% but the conditional tightening bias that has been included in the statement since April will be removed.
"This change will be used to signal the Bank has shifted its policy bias to a more neutral stance from the mild tightening bias that has been in place."
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