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Lower energy prices keep annual inflation rate at a cool 1.3% in March

Downward forces on oil and gas countered higher prices for shelter and food.

April 22, 2016   by The Canadian Press

OTTAWA — Inflation remained cool last month at 1.3% as stubbornly low energy prices continued to weigh down the annual rate, Statistics Canada said April 22.

The March inflation reading followed a 1.4% year-over-year increase in February and a 2% rise in January.

The agency’s latest consumer price index said its headline inflation rate remained below the Bank of Canada’s 2% target, largely due to a drop in prices for gasoline, natural gas and fuel oil. Prices dropped 13.6% at the pump, 17.4% for natural gas and 25.8% for fuel oil.

Those downward forces countered higher prices for shelter and food – particularly fresh vegetables and fresh fruit. Due in part to the lower Canadian dollar, vegetables prices were up 14.9% and fruit rose 11.3%.

The core inflation rate, which does not include some of the most volatile items such as gasoline, rose to 2.1% last month after a 1.9% reading in February. The central bank watches core inflation closely because it’s a better indicator of underlying price pressures.

Inflation was lower in eight provinces in March compared to the previous month, leaving Alberta and BC as the only ones that saw a higher rate.

Statistics Canada also released its latest numbers for retail trade, which showed an increase in sales for the second straight month.

Retail sales climbed 0.4% in February to $44.2 billion after rising 2% in January.

The February gains were seen in most sub sectors, with motor vehicles and parts dealers benefiting from the largest increase in dollar terms.

Sales were also up at clothing and clothing accessories stores, building material and garden equipment, as well as sporting goods, hobby book and music stores.

The biggest contributor of downward pressure on the headline retail number was the value of sales at gas stations, which slid for the eighth consecutive month to reach their lowest level since August 2010.

© 2016 The Canadian Press


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