28 May

More good news on inflation

General

Posted by: Donna White

The latest Statistics Canada inflation numbers have brought some more good news for consumers and anyone looking for interest rate relief.

The annualized rate of inflation in April dipped again, falling to a three-year low of 2.7%, down from 2.9% in March.

Two key components in the inflation calculation saw slowdowns last month: shelter costs, and food.  Shelter costs – which include mortgage costs and rents – increased by 6.4%, a 1 basis-point decline from March.  Grocery price inflation eased to 1.4%, a drop of 5 basis-points from March.  Gasoline prices, however, jumped 6.1%, which held the overall inflation rate somewhat higher.

Encouragingly, so-called, core inflation – which strips out prices for volatile items like food and fuel – also continued to decline.  This is the measure of inflation the Bank of Canada uses when making its interest rate decisions.  April’s average of the core inflation measures came in at 2.75%, down from 3.05% the month before.

Both headline and core inflation now fall inside the Bank’s 1.0% to 3.0% target range.

Many market watchers now believe the BoC will likely go ahead with an interest rate cut at its next meeting on June 5th.

There is one significant report that will arrive between now and then.  The latest Gross Domestic Product numbers will be released on May 31st.