The Consumer Price Index (CPI) rose 1 per cent in the 12-months to February, matching the increase from January. Lower gasoline prices were the largest contributor to the downward trend in consumer prices, falling 21.8 per cent compared to last year. The Bank of Canada's core CPI index, which excludes fuel, food and other volatile components, increased 2.1 per cent in February, following a 2.2 per cent increase in January. In BC, inflation registered just 0.8 per cent.
Core inflation edged lower in February but remains slightly above the Bank of Canada (BoC) target of 2 per cent. Since the Bank's March interest rate announcement, oil prices have weakened significantly and, as expected, incoming data has been soft and the Canadian dollar has lost some ground. Given recent data, the odds of the Bank of Canada lowering its target rate at its April meeting are probably about even.
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