Inflation cools to 1.7%, but underlying rate continues to heat up
OTTAWA — The annual pace of inflation cooled to 1.7 per cent last month — but rising prices underneath the turbulence of this headline number suggest the Bank of Canada is unlikely to veer from its interest-rate hiking path.
A new Statistics Canada report Friday showed the average of three core inflation measures, designed to filter out the noise of more-volatile items like energy prices, advanced once again in January to hit 1.8 per cent. It represented the reading’s highest mark since September 2016.
Average core inflation has been on a steady monthly climb since it fell to 1.3 per cent in May 2017. The movement suggests underlying consumer prices have been creeping higher along with Canada’s recent economic strength.
The upward momentum of underlying prices is an important piece of data because it’s certain to catch the attention of the inflation-targeting Bank of Canada, analysts said Friday.