Canadian inflation levels held steady in December, with annual growth matching the year-over-year increase observed in November.
Fresh data from Statistics Canada showed that the consumer price index went up by 2.2% annually last month. Meanwhile, the average of the nation’s three measures of core inflation stood at 2.1%, compared with November’s 2.13%.
For this year, the Bank of Canada is predicting inflation to hover at around 1.9%, slightly higher than the 1.8% in its initial forecast.
Earlier this week, the central bank decided to hold its key interest rate target at 1.75%.
TD Bank senior economist Brian DePratto noted that the energy sector’s strength (5.5% annual increase in December) helped offset some weakness that moderated overall yearly gains. Removing gasoline from the equation, the consumer price index was up just 2.0%.
“As has been the case for the latter half of last year, the fairly staid performance of the Bank of Canada’s measures, together with headline prints suggest that the underlying pace of inflation remains pretty much on the Bank of Canada’s two per cent target,” DePratto told BNN Bloomberg.
“We continue to look for a slight moderation in the pace of headline inflation as year-ago energy price comparisons normalize, but expect price gains to remain around the two per cent mark.”
The BoC has forecasted that the Canadian economy will grow by 1.6% this year, and then by 2% in 2021.