The Globe and Mail, March 21, 2014 - Consumer prices rose a solid and steeper than expected 0.8 percent on the month in mid-quarter. However, with February 2013 having registered an unusually large 1.2 percent jump, base effects saw the annual inflation rate drop from January's 1.5 percent to 1.1 percent, its lowest level since November.
Underlying prices were about as firm with the ex-food and energy index also up a monthly 0.8 percent and the BoC's gauge 0.7 percent higher. Nonetheless, annual rates for both core measures were also biased down by large gains in the year ago period to leave the former running at a 1.1 percent rate, down a tick from last time and the latter off 0.2 percentage points at 1.2 percent.
Seasonal factors are sizeable in February and after stripping these out the CPI rose a much more modest 0.3 percent on the month. Ex-food and energy, prices similarly advanced 0.3 percent while the BoC index was up 0.2 percent. Within the adjusted basket the sharpest monthly increase was posted by alcoholic beverages and tobacco products (1.4 percent) ahead of transportation (0.7 percent). Other sizeable gains were recorded in recreation, education and reading (0.6 percent) and food (0.5 percent). The only fall was in clothing and footwear (0.6 percent).
The February dip in the yearly inflation rate should prove short-lived and March is likely to see at least a partial reversal. Still, with all three price indicators once again close to the bottom of the BoC's 1-3 percent target range, today's report does nothing to pull forward the timing of any future hike in interest rates.
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