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CPI down? WTF ?!?

After a blur of a weekend I get to comment on the fact that after all the gloom and doom about the resurrection of Inflation and thus the most likely kick up of Interest Rates because of it, the CPI for March comes in (on Friday) and the numbers are better than expected? Just goes to show that no one is ever right all the time (just ask a weather man).

No we are not in a deflationary cycle, however last month the CPI was up 1.6% year over year and for March it is only 1.4%? Not too bad really, but again, Gasoline seems to be the major culprit (again).

CPI and Inflation
CPI for the last little while

Bank of Canada Core

The more important set of number is of course the Bank of Canada’s index and how it did, and we see:

The Bank of Canada’s core index advanced 1.7% over the 12 months to March, following a 2.1% rise in February. March’s increase was due primarily to a rise in prices for the purchase of passenger vehicles, passenger vehicle insurance premiums, property taxes, and food purchased from restaurants.

This is an even bigger slowing than for regular CPI, so what will this cause the Bank of Canada to do? My guess is they may still kick up interest rates but maybe only 25 basis points? I don’t think they will do nothing, as they have been blustering about change for far too long to do nothing.

The Really Big Table

Care to see which components contributed the most? Have a look at the big table:

Relative import1 March 2009 Feb

2010

March 2010 Feb to March 2010 Mar
2009 to Mar
2010
Unadjusted
% change
All-items 100.002 114.0 115.6 115.6 0.0 1.4
Food 17.04 121.5 122.7 123.1 0.3 1.3
Shelter 26.62 122.6 121.8 121.7 -0.1 -0.7
Household operations, furnishings and equipment 11.10 106.8 108.3 108.3 0.0 1.4
Clothing and footwear 5.36 95.7 91.2 93.6 2.6 -2.2
Transportation 19.88 110.5 116.7 117.1 0.3 6.0
Health and personal care 4.73 110.5 113.7 113.5 -0.2 2.7
Recreation, education and reading 12.20 101.8 104.1 102.5 -1.5 0.7
Alcoholic beverages and tobacco products 3.07 129.7 131.4 131.5 0.1 1.4
All-items (1992=100) 135.7 137.6 137.7 0.1 1.5
Special aggregates
Goods 48.78 107.6 108.5 109.0 0.5 1.3
Services 51.22 120.4 122.6 122.2 -0.3 1.5
All-items excluding food and energy 73.57 111.1 112.4 112.1 -0.3 0.9
Energy 9.38 127.1 132.3 134.5 1.7 5.8
Core CPI3 82.71 113.1 115.2 115.0 -0.2 1.7

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