Jeffrey Qián 錢 曄 // 778-238-2014 //

Canadian Inflation

The Consumer Price Index (CPI), which measures the rate of inflation in Canada,  rose 1.5 per cent in the 12 months to May, down 0.2 points from inflation in April. Gasoline prices were a significant drag on overall inflation, excluding gasoline, inflation was running at 1.9 per cent.  The Bank of Canada's core measure of inflation, which excludes volatile components like food and gasoline increased 0.1 point to 2.1 per cent, close to the Bank's target for inflation of 2 per cent.   In BC, provincial consumer price inflation was 1.7 per cent.

With inflation held in check by flagging commodity prices and a slow growing economy, there is very little pressure on the Bank of Canada to tighten interest rates.  Given the current outlook for the Canadian economy, inflation should remain below target over the next two years, keeping the Bank on the sidelines for the foreseeable future.

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