Quotes from BMO Capital Markets:- Canada’s inflation rate simmered down notably in Nov, and not entirely due to the hefty 7.5% m/m drop in gasoline prices in the month. The overall CPI fell a deeper-than-expected 0.4% m/m (and -0.2% s.a.), hacking the headline inflation rate to 2.0% y/y. Core prices also took a surprising drop of 0.2%, shaving the annual core rate to 2.1% y/y (from 2.3%). – The Bank of Canada was expecting core inflation to average 2.1% in Q4, when they last published a forecast in the October MPR. That now looks possible, even after the high-side surprise last month. Note that headline inflation in Canada remains 0.7 percentage points above its U.S. counterpart (at 1.3%), but that’s not a bad thing when much of the industrialized world is grappling with inflation that’s too low for comfort. – Meantime, the Bank of Canada now seems to be sitting pretty with both headline and core inflation almost bang-on the 2% target. The deeper drop in pump prices into this month suggests that headline inflation will fall further in next month’s report to the low 1%-to-1.5% range.
The material has been provided by InstaForex Company – www.instaforex.com