Inflation rate slipped
OTTAWA—Canada’s inflation rate slipped to its lowest level in more than three years in January while retail sales in December posted their biggest drop since April, 2010 due to stingy shoppers and lower new car sales, Statistics Canada said.
The Canadian dollar fell to an eight-month low after the two reports, dropping by more than half-a-cent to 97.52 cents (U.S.) this morning.
Excluding gasoline prices, which fell 1.8 percent year-over-year, Canadian inflation increased 0.6 percent after rising 0.8 percent in December.
Higher prices for food—up 1.1 percent—helped offset the lower fuel prices.
TD Bank economist Diana Petramala said with inflation well below the Bank of Canada’s two percent target, the central bank is likely to keep rates where they are though 2013.
The inflation report came as Statistics Canada also announced a larger-than-expected drop in retail sales in December, which broke a streak of five-consecutive monthly gains.
“The holidays weren’t very happy for retailers,” CIBC economist Emanuella Enenajor said in a report, which noted that December was affected by November’s “Black Friday” sales.