By Akhil Shah
OTTAWA (MNI) – Canadian inflation expectations are once again
expected to remain subdued in December’s monthly consumer price report,
released Tuesday by Statistics Canada.
Inflation expectations will be led by higher energy prices, while
price in the other seven sectors in the Canadian CPI basket of goods are
expected to remain level.
The year-over-year headline number is expected to rise 2.4%
according to economists surveyed by Market News International. On a
month-over-month basis, the “all-items” number is expected to edge up
The core index, which strips out volatile items such as food and
energy, is expected to rise 1.6% year-over-year. On a monthly basis, it
is estimated to have dropped 0.2%, according to economists surveyed by
Market News International.
Consumer prices advanced 2.0% in November, following a 2.4% gain in
October. November’s gains were mainly attributable to a 6.7% spike in
energy prices compared with a year ago, and December they expect to
Diana Petramala, an economist at the Toronto Dominion (TD) bank,
sees monthly inflation edging up 0.1% in December, while annual
inflation will be 2.5% higher compared to last December. Core CPI is
expected to drop 0.3% month-over-month, but nevertheless will be 1.5%
higher for the year.
“We don’t see any inflationary pressures in the Canadian economy,”
Petramala said. “Excluding the energy sector, we could see some gain in
food prices,” Petramala added.
“The manufacturing sector will be expected to be weighed down by
slow U.S. growth,”Petramala said.
“The headline number will look a good deal stronger due to energy
costs and base year effects, with our own estimate being for a rise of
some 2.6% on the year,” Peter Buchanan, a senior economist at the
Canadian Imperial Bank of Commerce (CIBC) wrote to his clients.
In December 2009, consumer prices dropped 0.3% and CIBC’s
projected 0.3% increase in consumer prices for December 2010, is
expected to push annual inflation to 2.6%. “These base-year effects will
reverse in the following month, and we should see headline inflation
drop a few ticks then,” Emanuella Enenajor, an economist at CIBC, wrote
to her clients.
** Market News International Ottawa **