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Saturday, June 23, 2012 - Alberta Rates of Inflation Lowest in Canada

Alberta and the Calgary region had the lowest rates of inflation in the country in May, according to Statistics Canada.

Statistics Canada reported Friday that in the 12 months to May, consumer prices rose at a slower rate in all provinces compared with April. Newfoundland and Labrador (+2.5%) continued to post the largest increase, while Alberta (+0.4%) continued to record the lowest. Nationally, prices rose by 1.2 per cent.

On a monthly basis, prices declined by 0.3 per cent in Alberta and by 0.4 per cent in the Calgary region. Across Canada, consumer prices were down 0.1 per cent from April.

Nationally, the federal agency said the energy index fell 1.6 per cent in the 12 months to May, its first year-over-year decline since October 2009. Natural gas prices (16.6 per cent) continued to post declines. Gasoline prices decreased 2.3 per cent, after 22 months of year-over-year increases.

Excluding energy, the Consumer Price Index rose 1.7 per cent in the 12 months to May after increasing 2.1 per cent in April, added Statistics Canada.

Nationally, the federal agency said the energy index fell 1.6 per cent in the 12 months to May, its first year-over-year decline since October 2009. Natural gas prices (16.6 per cent) continued to post declines. Gasoline prices decreased 2.3 per cent, after 22 months of year-over-year increases.

Excluding energy, the Consumer Price Index rose 1.7 per cent in the 12 months to May after increasing 2.1 per cent in April, added Statistics Canada.

The Bank of Canada’s core index rose 1.8 per cent in the 12 months to May, following a 2.1 per cent gain in April.

In April, consumer prices rose by 0.8 per cent in Alberta from last year compared with a national hike of 2.0 per cent. Prices were up 0.9 per cent in the Calgary census metropolitan area. On a monthly basis, consumer prices rose by 0.3 per cent in both Alberta and the Calgary CMA but were up 0.4 per cent across the country in April.

“Inflation is not exactly crowding the top of many worry lists at the moment, but it is nevertheless reassuring to see inflation receding rapidly as gasoline prices fade fast,” said Douglas Porter, deputy chief economist with BMO Capital Markets. “For the Bank of Canada rate outlook, this simply drives home the point that there is now precisely zero urgency to tighten. Even above and beyond the relentless concerns about Europe, as well as the new tighter mortgage rules, the domestic economic case for rate hikes in 2012 is crumbling, as both growth and inflation come in on the low side of expectations.”

Francis Fong, economist with TD Economics, said the transitory nature of the decline in gasoline prices “leads us to believe that this month’s reading is likely more of an outlier than the start of a new trend in consumer prices.”

“From the perspective of the interest rate outlook, the Bank of Canada was given some wiggle room with yesterday’s announcement of new mortgage lending rules which will help address the overvaluation in the Canadian housing market and the elevated levels of debt now being held by households,” said Fong. “Fundamentally, given a modest growth outlook for the Canadian economy, a contained pace of inflation, and elevated financial tensions in Europe, TD Economics feels that it is unlikely that the Bank will move on the overnight rate before the year is out.”

 Read more: http://www.calgaryherald.com/business/Calgary+Alberta+rates+inflation+lowest+Canada/6824454/story.html#ixzz1ydC5RcAq

posted in General at Sat, 23 Jun 2012 09:36:48 -0600

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