Inflation cools to 1.7 per cent, but underlying rate continues to heat up

The Canadian Press</span>
Published Friday, February 23, 2018 8:42AM EST
Last Updated Friday, February 23, 2018 8:51AM EST

OTTAWA -- The annual pace of inflation cooled to 1.7 per cent last month -- but rising prices underneath the turbulence of the headline number suggest the Bank of Canada is unlikely to veer from its interest-rate hiking path.

The average of three measures of core inflation, designed to filter out the noise of more-volatile items like gasoline, advanced once again in January to hit 1.8 per cent -- its highest mark since September 2016.

Average core inflation has been on a steady monthly climb since May 2017, a move that suggests underlying consumer prices have been moving higher due to Canada's recent economic strength.

The core measures are closely watched by the inflation-targeting Bank of Canada and the reading likely reinforces expectations it will continue hiking its trend-setting interest rate.

Overall, Statistics Canada's headline reading of 1.7 per cent for January was weaker compared with a 1.9 per cent result in December and 2.1 per cent in November.

The federal agency says the main downward forces on inflation last month were due to cheaper prices for video and digital equipment, electricity and travel tours.

The report says the primary upward pressure on inflation was driven by higher costs for air transportation, gasoline and restaurants.

Let's block ads! (Why?)