Earlier today, Statistics Canada reported that the nations inflation rate has dipped from 1.2 percent in December to 1.1 percent in January. This marks the fourth consecutive month that Canadas inflation rate has fallen although the pace of the decrease has slowed since a major drop in October 2008.
“This is a softer than expected report, and suggests that not only is growing economic slack taking prices broadly lower, but also that the impact of the weaker Canadian dollar, which would otherwise push inflation higher, is not a formidable force,” says Charmaine Buskas, senior economics strategist at TD Securities, in The Globe and Mail last Friday.
On their website, CTV has reported that analysts believe that prices will likely continue to slide in the near future. “With the economic downturn gathering force and commodity prices still reeling, inflation is poised to move decisively lower in the months ahead,” says Douglas Porter, deputy chief economist at BMO Nesbitt Burns.
The top contributing factor to the lower rates, according to Statistics Canada, is the decreased price of gas. Drivers all over Canada are surely pleased with the fact that in January 2009, filling up at the pump was 23.5 percent cheaper than it was just one year earlier.
CTV also reports that the cost of purchasing and leasing passenger vehicles has fallen by 8.2 per cent, helping to push the index down even further.
The cost of food and shelter, however, has continued to rise. They note that food prices had increased 8.6 per cent during the 12-month period from January 2008 to January 2009 while shelter costs rose 3.3 percent in that time.
According to Statistics Canada, Januarys inflation rate would have decreased by 0.2 percent had food and shelter not been taken into consideration. “Bakery and cereal products and fresh vegetables exerted upward pressure on the food index,” says their report.