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Slight rebound in inflation at ; 3.4% in Canada in December

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Inflation is struggling to return to the annual range of 2% to 3% that the Bank of Canada is targeting.

  • Stéphane Bordeleau (View profile)Stéphane Bordeleau

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The Consumer Price Index (CPI) rose 3.4% in December compared to the same period a year ago. As economists predicted, the CPI rebounded slightly: it was 3.1% in November.

This acceleration in December inflation comes after two months of relative stability in the CPI at 3.1% in November and October.

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This acceleration in annual inflation last month is mainly attributable to the price of gasoline which increased by 1.4% year over year in December while it posted a decline of 7.7% in November, explains Statistics Canada.

If we exclude gasoline from the equation, inflation was +3, 5% in December in Canada, down 0.1 percentage points from November (+3.6%).

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Last month, airfares saw the largest increase, jumping 31.1% from November, propelled by increased travel during the holiday season. On an annual basis, however, the increase in airfares was 9.7% lower this year than the same period last year.

In addition to air travel, the prices of fuel oil, motor vehicles and rents contributed the most to the acceleration of inflation on an annual basis in December. The increase in the price of the grocery basket, for its part, remained at 4.7% in December, the same level as in November.

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In Quebec, inflation also accelerated last December, rising to 4% on an annual basis, an increase of 0.4 percentage points compared to November data. Which makes Quebec the province with the highest inflation rate in the country.

Nova Scotia comes next (3.6%) , Ontario (3.4%), British Columbia (3.4%) and Newfoundland and Labrador (3.4%).

It was also in Manitoba that we found the lowest annual inflation rate in the country in December, at 1.7%.

Several observers had anticipated this slight rebound in inflation in December, in particular due to the year-on-year effect of the price of gasoline. The prices of housing, energy, food and the cost of credit remain high and employment remains quite strong in the country, which contributes to maintaining inflation beyond of the annual range of 2% to 3% that the Bank of Canada is targeting.

The situation is quite similar in the United States, where the rate of #x27;annual inflation rebounded to 3.4% in December – up 0.3 percentage points from November – despite the Federal Reserve's attempts to contain inflationary overheating.

  • Stéphane Bordeleau (View profile)Stéphane BordeleauFollow

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