Inflation reading forecast to dip on lower gasoline prices

Inflation reading forecast to dip on lower gasoline prices

Sometimes it’s hard to remember that prices at the gas pump can and do fall, but they did last month, taking inflation along for the ride.

Economists expect Statistics Canada to report this week that consumer prices fell 0.2 per cent on a seasonally adjusted basis in April, taking the annual inflation rate down below 1 per cent, to somewhere between 0.5 per cent and 0.8 per cent.


That would have been helped along by the death of the harmonized sales tax in British Columbia last month.

If correct, April would mark the second monthly drop in consumer prices in a row, brought down by what Toronto-Dominion Bank says was probably a decline of 8.2 per cent at the pump, the fastest for an April reading since 2003.

“Canadian inflation looks to slow back below 1 per cent in April due largely to an unseasonal decline in gasoline prices,” said Benjamin Reitzes of BMO Nesbitt Burns.

“The big decline in the headline would leave inflation well below the Bank of Canada’s 1-per-cent forecast for all of [the second quarter], though both May and June should see some acceleration,” he added.

The so-called core rate of inflation, which strips out volatile items and helps guide the central bank, is expected to be 1.2 per cent on an annual basis when Statistics Canada releases its report Friday morning.

The Bank of Canada is widely expected to hold its benchmark rate at 1 per cent until late next year or early 2015, given the economic outlook and tame inflation.

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