Inflation!

This morning StatsCan released the February CPI and Core CPI, the first rising by 2.2% and the latter rising by 0.9%.  In both case these represent small reduction over the previous month (0.1% and0.5% respectively).  The biggest price increase has been fuel which rose 15% (year on year), after having risen 12% (again YoY) in January, followed by food...

For most Canadians their most obvious view of inflation is when they fill at the pump!  I remember, not so long ago filling up our car (when it was really empty) was around $40, now its near $75!  This is closely followed by food purchase, so the average Canadian's experience of inflation is somewhat different than what the headline suggests, but it remains that on a global basis, Core CPI is now below the BoC's target zone, more food for thought for Carney & Friends.

Inflation pressures are worse in the transport sector (obviously), with only cloth of footwear seeing a reduction in price (since nearly 95% of goods in this segment are imported the reduction in price is obvious). Geographically, the results are unchanged from previous months with Newfoundland and Ontario showing the higher month-on-month inflation while Alberta and PEI are at the other end of the scale.

Policy wise its not clear that this has much policy impact for the bank of Canada.  This morning’s aggressive action by the G7 central banks to support the Yen is more indicative of the type of action we will see over the next few months since Japan will have to spend billions in reconstruction efforts (never mind the whole nuclear situation).

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