Canadian CPI Inflation - February 17, 2012

Canadian CPI inflation registered 2.5 per cent (year-over-year) in January, a 0.2 point increase from November. Consumer prices were led higher by a 6.5 per cent rise in energy prices and a 4.2 per cent rise in food prices.  The Bank of Canada's core inflation measure, which excludes food and energy prices, rose 2.1 per cent in January from 1.9 per cent in December. Consumer prices in BC were 1.7 per cent higher in January (year-over-year).
 
Inflation began 2012 slightly above the Bank of Canada's 2 per cent target, with most categories of the CPI recording increases. While this suggests an underlying firmness to inflation, slack in Canadian  labour markets and expectations of slowing economic growth will likely place downward pressure on inflation in coming months. We therefore do not a change in the Bank of Canada's monetary policy stance this year.