Canada: Stable inflation is good news for consumers - RBC

Josh Nye, senior economist at the Royal Bank of Canada, points out that the Canada’s headline inflation ticked up to 2.0% year-over-year in April from 1.9% in March as per expectations.

Key Quotes

“The modest increase was due to rising energy prices, which are back into positive territory (year-over-year) for the first time since last October.”

“The Bank of Canada’s core measures averaged 1.9% in April—they’ve been remarkably steady at 1.9-2.0% for the last 15 months.”

“While low pump prices around the turn of the year are now a distant memory, there was some good news for consumers in today’s CPI report. Core inflation remained steady at 2%, giving the Bank of Canada plenty of leeway to hold interest rates steady (and watch other developments, like rising global trade tensions).”

“For households, that means less of an increase in debt service costs than was seen last year. And while wage growth has been disappointingly slow, hourly pay is still outpacing overall inflation, giving consumers at least some increase in purchasing power.”

“Finally, while imposition of the federal carbon pricing backstop in some provinces added to rising energy costs in April, the average household gets that money back when they file their taxes.”