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Stable gasoline prices cited as March inflation tumbles
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Stable gasoline prices cited as March inflation tumbles
Canada's inflation rate dropped to just under two per cent in March, down from 2.6 per cent in February, as the cost of food and fuel grew at a slower pace, Statistics Canada said Friday.
Consumer prices rose just 1.9 per cent last month and marked a significant decline from this time last year when inflation peaked at 3.3 per cent amid turmoil in the Middle East that threatened oil supplies.
It's the first time inflation has been below the Bank of Canada's target rate of two per cent since September 2010, easing pressure on the central bank to hike the overnight lending rate now set at one per cent.
The bank's core inflation rate, which it uses to measure underlying price pressures excluding volatile items like energy and some foods, also fell to 1.9 per cent in March.
But consumers are still feeling the pinch as the cost of food is 2.2 per cent higher than it was at this time last year. Food prices did retreat by almost half compared to February's 4.1 per cent increase.
The cost of energy is also 5.1 per cent higher than last March, down slightly from February when those expenses were up 7.2 per cent.
The year-over-year cost of gasoline eased to 6.6 per cent in March, following an increase of 8.9 per cent in February, StatsCan said.
On a month-to-month basis, prices rose in four of the eight major components, led by gasoline, which went up 4.4 per cent from February, and clothing and footwear, which increased by 3.2 per cent.
Fresh vegetables were 15.8 per cent less expensive in March compared to the same time last year.
The cost of video equipment fell 13.5 per cent, furniture was down 4.9 per cent and the cost of women's clothing slipped 2.1 per cent.
Price growth on a year-over-year basis slowed in every province, StatsCan said.
Gasoline prices, along with food, constitute the two biggest elements that make up the consumer price index that StatsCan tracks.
Consumer expenses increase as people fill up their vehicles, but higher fuel costs also drive up transportation and business costs that are ultimately passed onto customers.
In the latest economic forecast released earlier in the week, the Bank of Canada said underlying inflation pressures had been greater than anticipated, but were expected to slow.
The bank predicted inflation will moderate in the second quarter - the April-June period - and hover around two per cent over the next few years.
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