Jan 25, 2013, Alberta’s inflation the lowest

CALGARY — Alberta’s annual rate of inflation was the lowest in Canada in December, according to Statistics Canada.

The federal agency reported Friday that the Consumer Price Index was flat with no change in the 12 months to December in the province.

Meanwhile, in Canada, overall inflation rose by 0.8 per cent year-over-year.

On a monthly basis, the CPI dipped by 0.6 from November for both Alberta and Canada on a whole.

In the Calgary census metropolitan area, the CPI was down 0.7 per cent from the previous month and decreased by 0.2 per cent on an annual basis.

The Bank of Canada’s core index for Canada rose 1.1 per cent in the 12 months to December, following a 1.2 per cent advance in November.

On a monthly basis, the seasonally-adjusted core index increased 0.1 per cent in December after registering no change in November.

Todd Hirsch, senior economist with ATB Financial, said “measures of consumer price inflation are often met with some disbelief by the general public.”

“Official statistics say one thing, but consumers get the feeling that prices are all going in one direction: higher. This month, the official measure of inflation in Alberta is sure to get the skeptics fired up,” he said.

“But just because overall prices in Alberta did not change year over year, there was plenty of both inflation and deflation by individual items captured in the index. Leading the charge on the inflation front were prices for fresh fruit (7.3 per cent), home and mortgage insurance (6.9 per cent), and internet online subscriptions (6.0 per cent). Pulling overall prices lower, however, were big price decreases for electricity (27.3 per cent), fresh vegetables (13.7 per cent), and natural gas (7.6 per cent). Most other prices, however, were fairly contained within the two to three percentage range, both higher and lower.”

Doug Porter, deputy chief economist of BMO Capital Markets, said “Canada still boasts one of the lowest inflation rates in the developed world.”

“The combination of a loonie near par, growing slack in the economy, and mild wage gains are all keeping a very tight lid on Canadian prices,” said Porter. “With inflation around one per cent and GDP growth not much higher than one per cent, the Bank of Canada looks locked on the sidelines for all of 2013.

“The low-low inflation result will simply put additional near-term downward pressure on an already sagging Canadian dollar, as it pounds home the rather obvious point that the BoC is going nowhere fast.”

Francis Fong, economist with TD Economics, said the inflation numbers were well-below what markets and the Bank of Canada were expecting and inflation simply is not an issue in Canada, at least not at the moment.

“That being said, the end of 2012 was certainly a cyclical low with regards to economic growth and things are expected to heat up from here,” said Fong. “With the substantial improvement in financial conditions seen across Europe and the U.S., confidence is expected to return and growth is expected to accelerate through the end of 2013. This would suggest that the inflation statistics will likely only rise from here.

“However, given the low starting point, the Bank of Canada likely has little impetus to move off the sidelines in the near future. With economic growth expected to accelerate, household debt growth slowing, and a decided lack of inflationary pressures, the Bank is somewhat vindicated in its statement that the need to withdraw monetary stimulus is ‘less imminent’.”

mtoneguzzi@calgaryherald.com
Twitter: MTone123