2023-10-17 12:39:12
The Consumer Price Index (CPI) fell back below the 4% threshold in September, to settle at 3.8%, which reduces the probability of an increase in interest rates from the Bank of Canada next week.
The slowdown is widespread, according to Statistics Canada, but it is mainly attributable to the drop in prices of certain travel services, durable goods and grocery products.
The year-over-year increase in gasoline prices slowed the decline in the CPI. In Quebec, the index did not change and showed an increase of 4.8%, or 1% more than the Canadian average.
This good news on the inflation front should encourage the Bank of Canada not to intervene next week and to maintain its key rate at 5%.
Inflation should continue to slow in the coming months, according to Claire Fan, economist at the Royal Bank, who does not foresee another increase in interest rates in 2023.
National Bank economists Matthieu Arseneau and Alexandra Ducharme, for their part, predict “economic lethargy over the next 12 months” without further tightening from the Bank of Canada.
Respite from the grocery store
Month over month, the index fell 0.1%, following August’s 0.4% increase. The price of food purchased in grocery stores continues to increase, but at a slower rate of 5.8% in September, following an increase of 6.9% in August.
The increase in the price of meat, dairy products, coffee and tea is less rapid. On the other hand, the rise in the price of fresh fruit, fish, bakery products and oil accelerated.
Statistics Canada points out that airfares decreased by 21% year over year, as airlines increased their number of flights. Telephone services show an annual decline of 12.9%. According to Quebecor, this drop reflects increased competition in the wireless sector since the acquisition of Freedom Mobile by Videotron in April 2023.
“The new data revealed by Statistics Canada confirms what we promised: since its acquisition by Videotron, Freedom Mobile is initiating change and competitors are following,” declared Pierre Karl Péladeau, president and CEO of Quebecor, in a press release. .
The price of new automobiles is also increasing less quickly, since the inventory level at dealerships has increased. The price of furniture is down 4.6% and that of household appliances is down 2.3%, reflecting the tendency of households to postpone major purchases.
Core inflation measures, excluding the most volatile items like gasoline and food, are also falling, but not as much as the Bank of Canada hoped, according to Randall Bartlett, senior director, Canadian economy, at Desjardins.
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