(September 17 – 13:30 ET) – The Canadian consumer price index rose
0.3 per cent in August. That’s slightly above our expected range of 1.9 per cent to 2.0 per cent though in line with market expectations, says Paul Ferley, Assistant Chief
Economist, Bank of Montreal.
Ferley says practically all of the upward pressure came from energy prices, which rose 3.5 per cent in the month. This in part reflected rising crude oil prices that sent gasoline prices up 6.3 per cent and fuel oil prices up 5.3 per cent. The energy component was
also boosted by a 1.9 per cent jump in natural gas prices.
Statistics Canada attributes the increase to “a short supply of natural gas in Western Canada and the prospect of a growing demand for natural gas in the US over the coming
winter.” The other main volatile component of the CPI, food, provided some offset
as it declined 0.8 per cent.
“With unused capacity still evident in the Canadian economy, as evidenced by a still high unemployment rate, we feel that the main risk to the inflation outlook is that it drops below rather than rises above the target band,” stated Mr. Ferley. “Comments by the Bank of Canada suggest that they would apply a similar relative weighting. Thus we expect that the central bank will continue to resist upward interest rate pressure from the US.”
-IE Staff
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