The decline in gasoline prices pushed inflation at 1.4%

La baisse des prix de l’essence fait reculer l’inflation à 1,4%

OTTAWA – The falling price of gasoline at the pump has to slow down annual inflation in the country last month. It has reached its rate, the slowest in more than a year, said on Wednesday Statistics Canada.

Inflation of 1.4 percent registered in January – the lowest price growth since the fall of 2017 – was a result of inflation of 2.0 per cent in December, noted the federal agency.

Economists expected average inflation of 1.5 per cent in January, according to forecasts gathered by Thomson Reuters Eikon.

Across the country, Canadians have paid their essence 14.2 per cent cheaper last month than in January 2018. The price of computer equipment fell 9.2 percent from a year earlier, while those for the accommodation of travelers have succumbed to 3.2 per cent. The report also indicates that heating oil prices were down 3.3 percent and those of natural gas, 2.3 percent.

Excluding gasoline, the inflation was 2.1 percent last month, said the agency.

The lower prices in categories such as energy have offset stronger growth in other sectors. Last month, fresh vegetable prices had increased by 13.2 percent, those costs and mortgage interest of 7.8 percent and those of food purchased in the restaurants of 5.3 per cent.

The average of the three readings of core inflation the Bank of Canada, which exclude the more volatile, such as gasoline, remained stable at 1.9 percent in January, for a third consecutive month, said Statistics Canada.

The Bank of Canada expects inflation to recede slightly below its ideal target of 2.0 percent and remains at this level throughout 2019, primarily due to lower gas prices.

The central bank, which aims to keep inflation between 1.0 percent and 3.0 percent, may raise its key interest rate to avoid inflation goes up too high.

The next decision of the central bank on its monetary policy is scheduled for next Wednesday. Most observers expect that it will leave its key rate unchanged at 1.75 per cent.

“I don’t think this report will affect the decision of the Bank of Canada,” said Alicia Macdonald, senior economist with the Conference Board of Canada, about the index of consumer prices on Wednesday.

“We believe that they will stay in the queue. What they are studying actually, that is how the economic growth will take place over the next few months and what that means for future inflation.”

Ms. Macdonald said he expected that the persistent weakness of gas prices weighs on the next reading of the index of consumer prices for the month of February.

Royce Mendes, CIBC world Markets, wrote in a research note published Wednesday that the central bank would look beyond the inflation figures, especially if core inflation was close to the target of 2.0 percent.

“The Bank of Canada appears well-positioned to stay on the sidelines for at least the first half of the year,” said Mr Mendes.

Last week, the governor of the Bank of Canada, Stephen Poloz, has indicated that the trajectory of expected increase in the interest rate to a destination range likely range between 2.5 percent and 3.5 percent was “very uncertain”.

The bank, he said, is closely monitoring several significant uncertainties.

Among these, Mr. Poloz said that the institution would examine in particular the impact of higher interest rates on Canadian debt, the adjustment of housing markets to the higher costs of borrowing and guidelines more stringent mortgage, investment prospects of businesses and the global commercial environment, “very uncertain”.

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