Statistics Canada has reported the December inflation numbers.
The Canadian CPI was up 1.6% from the prior year held down by lower gasoline prices.
Core inflation which strips out the volatile food and energy sectors was up 1.9%. (For years core inflation was lower than the actual all-in headline number and people howled and asked why those items should be ignored, now that core inflation is higher the howlers are silent.)
Grocery inflation is high at 4.1% year over year.
Clothing inflation was surprisingly low at 0.7%. That’s hard to understand given so much clothing is imported. It may be that the Canadian dollar has not lost as much ground to the currencies of the countries that clothing comes form as compared to its loss against the U.S dollar. Or perhaps the price impact is delayed.
The Bank of Canada government sated emphatically that Canadians should expect 2% inflation. I would have expected a one-time bump of several extra percentage points related to the lower dollar but it is not yet much in evidence. The dollar fell quickly and the full impact has certainly not yet shown up at retail.
We may see substantial inflation in some auto prices in cases where they are manufactured in the United States. It is complex however as car companies need to ain competitive against cars made in other countries against which the Canadian dollar has not had nearly as much depreciation.