May 15, 2019   SOURCE: PR NewsWire

Core Inflation Cools

OTTAWA, May 15, 2019 /CNW/ - The Conference Board of Canada's Principal Economist Alicia Macdonald offers the following insights on today's consumer price index data:

"Total inflation hit 2.0 per cent in April while core inflation growth decelerated to a 1.9 per cent pace, reflecting weaker economic growth. Excess supply is expected to linger in the economy through 2020 keeping inflation in check. As a result, the Bank of Canada will be in no rush to lift interest rates."

Insights: 

    --  After increasing by 1.9 per cent in March, inflation inched up to 2.0
        per cent in April.
    --  As we saw last month, one of the primary drivers of faster price growth
        was an increase in gasoline prices, which were up 10 per cent monthly
        due to factors such as the introduction of, or increase in, carbon
        prices in some provinces, higher global oil prices and the switch to
        summer-blend gasoline.
    --  Despite the monthly increase, gasoline prices are still down on a
        year-over-year basis. Inflation, excluding gasoline, was up 2.3 per cent
        last month compared to 2.2 per cent growth in March.
    --  While price growth was broad based--seven of eight of the major
        aggregates showed price growth over the past year--growth was strongest
        in food and shelter costs reflecting higher prices for fresh vegetables
        (up 14.5 per cent) and mortgage interest costs (up 8.2 per cent).
    --  After hitting 2.0 per cent in March, the average of the Bank of Canada's
        core inflation measures decelerated to a 1.9 per cent pace in April as
        CPI-trim and CPI-median posted softer growth while CPI-common held
        steady at 1.8 per cent.
    --  With our latest forecast suggesting that the economy will be slow to
        absorb its current excess capacity, inflation pressures will remain
        muted. As such, the Bank of Canada is expected to remain on hold into
        2020 as it evaluates how quickly the economy will emerge from its
        current soft patch.

Content Attribution:
Alicia Macdonald
Principal Economist
The Conference Board of Canada

The Conference Board of Canada is the country's leading independent research organization. Our mission is to empower and inspire leaders to build a stronger future for all Canadians through our trusted research and unparalleled connections. Follow The Conference Board of Canada on Twitter.

SOURCE Conference Board of Canada