The annual rate of inflation in Alberta in January was lower than the Canadian average, according to Statistics Canada.
The federal agency reported on Wednesday that the consumer price index rose by 1.2 per cent year over year in the province while it was 1.4 per cent nationally.
Across Canada, the index was down from a two per cent hike in December.
“Energy costs declined 6.9 per cent, while the growth in the price of services slowed to 2.7 per cent as transitory pressures from the air transportation, telephone services and travel tours indexes, which boosted the all-items CPI in December 2018, dissipated. Excluding gasoline, the CPI was up 2.1 per cent on a year-over-year basis,” explained StatsCan.
It said prices increased year over year in seven of the eight major components in January, with the transportation component (-0.4 per cent) posting the sole year-over-year decrease. It was the first 12-month decline in the index since July 2016.
“Gasoline prices led the decline in consumer energy costs amid an oversupply in the United States, falling 14.2 per cent year over year in January. Similarly, prices for fuel oil and other fuels (-3.3 per cent) declined following an increase the previous month. Natural gas prices (-2.3 per cent) continued to trend downward,” added StatsCan.
James Marple, senior economist with TD Economics, said the Bank of Canada is maintaining a bias to further tightening, but with limited inflation and slowing growth there’s little urgency on this front.
“Indeed, much like their counterpart stateside, the benign inflation environment may lead policy-makers to question whether further rate hikes are even necessary or whether the current policy setting is the fabled Goldilocks ‘just right’,” said Marple.
Douglas Porter, chief economist with the BMO Financial Group, said big swings in energy prices in the past year have triggered some hefty moves in headline inflation but the underlying story is remarkably calm.
“Even with all the noise surrounding cannabis, rents and air fares, core inflation remains seemingly locked in at just below two per cent. With underlying inflation so stable and economic growth simmering down … the Bank of Canada’s stay on the sidelines looks to be a long one,” he said.
– Mario Toneguzzi