StatsCan Reports Reduced Inflation, Rising Pay and Stable Interest Rates

In a report recently released by Statistics Canada on Friday, it was indicated that the annual rate of inflation has decreased down to just 0.4 per cent in April, which is even lesser than the expectation of economists and well below the 1-per-cent of March. Consequently, it was observed that pay is on the rise, resulting in the inflation being at commendable pace since the fall of 2009, while promising that remarkably low-interest rates will remain imposed for at least another year.

It was compared that the April rates are the slowest since October, 2009, whereas on the other hand, the hourly earnings of permanent workers have increased up to 2.8 per cent from a year ago. It is attributed that the decline in inflation in April was mainly due to the 6 per cent reduction in gasoline prices on a year-over-year basis, which was also the fastest decline since October, 2009. Therefore, considerably low gasoline prices also resulted in considerably low prices for passenger vehicles. Meanwhile, the core inflation excluding volatile items such as food and energy also resulted in a decrease down to 1.1 per cent from 1.4 per cent in March.

These considerably low inflation rates indicate very little pressure on the Bank of Canada to raise its benchmark interest rate this year. CIBC World Markets mentioned in a research note that “the headline inflation rate marked a stark deceleration from the prior month’s 1-per-cent pace, and is the lowest inflation rate since the recessionary period.”

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