Canada: Inflation ticks up in December, remains elevated
Consumer prices increased a seasonally-adjusted 0.28% over the previous month in December, a weaker increase than November’s 0.35% rise. Looking at the details of the release, prices for clothing and footwear, and transport fell, while prices for shelter increased at a faster rate in December.
Inflation rose slightly to 4.8% in December, up from November’s 4.7% and marking the highest rate in nearly a decade. Moreover, annual average inflation increased to 3.4%, which was also higher than November’s 3.1%.
Commenting on the latest inflation reading with regards to the monetary policy outlook, Andrew Grantham, senior economist at CIBC World Markets, noted:
“For the Bank of Canada, headline inflation in Q4 as a whole was slightly below its October MPR forecasts. However, there may be increasing concern regarding the length of time it will remain elevated for and a broadening of price pressures outside of food, energy and supply constrained items. As such, while we lean towards the Bank holding off on rate hikes for now to see signs of recovery after this Omicron wave of business restrictions.”