September 25, 2016
OTTAWA: Canada’s annual inflation rate in August dipped to a 10-month low of 1.1 per cent, the seventh consecutive month it has remained below the Bank of Canada’s 2.0 per cent target, Statistics Canada said on Friday.
Analysts polled by Reuters had forecast the annual rate would edge up to 1.4 per cent from 1.3 per cent in July. The August rate was the lowest since the 1.0 per cent recorded in October 2015.
Food prices exerted the main drag on the overall rate, rising by 1.1 per cent in the 12 months to August compared to a 1.6 per cent year-on-year-increase in July. The recreation, education and reading index grew 1.1 per cent in the year to August, down from 1.9 per cent in July.
The annual core inflation rate, which strips out the prices of energy and some foods and is watched closely by the Bank of Canada, dipped to 1.8 per cent from 2.1 per cent.
The central bank, which says inflation is being influenced by temporary factors, is widely expected to keep interest rates steady until 2018.
The value of Canadian retail trade unexpectedly fell in July, dipping by 0.1 per cent from June as gas station sales dropped for the first time in four months, Statistics Canada data indicated on Friday.
Analysts in a Reuters poll had predicted sales would increase by 0.1 per cent. Statscan revised June’s data to show no change from May after initially saying sales had fallen by 0.1 per cent.
Sales decreased in five of 11 subsectors while in volume terms, sales grew by 0.3 per cent. Gas station sales fell by 3.0 per cent, pulled down by weaker pump prices.
AUTO PARTS SECTOR
Motor vehicle and parts dealers, the largest subsector, posted a 0.2 per cent drop in sales, the fourth decline in five months. Food and beverages stores, the second-largest sub-sector, saw sales edge down by 0.1 per cent.
Sales at furnishing and home furnishing stores decreased by 1.4 per cent, while sales at clothing and clothing accessories stores rose by 1.6 per cent.
Meanwhile, Canadian stocks halted a four-day rally as energy producers tumbled with crude, while inflation data that boosted the likelihood of added stimulus sent financial shares lower and an unexpected drop in retail sales weighed on consumer shares.
The S&P/TSX Composite Index fell 0.7 per cent to 14,697.93 in Toronto, paring the best weekly advance since April to 1.7 per cent. The benchmark for Canadian equity has surged 4.5 per cent in the third quarter, pushing its gain this year to 13 per cent.
Nine of the 11 sectors declined Friday, with raw-materials and energy producers losing more than 1 per cent. Oil and gas companies retreated as New York crude slumped as much as 4.1 per cent to trade at around $44 a barrel.
Financial-service firms fell 0.5 per cent on Friday. Only six of the 26 members in the group advanced. Combined the firms make up about one-third of the S&P/TSX. Bank of Nova Scotia fell 0.9 per cent after closing at a record.
Canada’s core inflation rate was the slowest in two years in August, with the pace of consumer prices and overall inflation decelerating. The data spurred bets the economy may need added monetary stimulus. That hit financial shares that would see profits crimped by lower interest rates.
Shares of consumer staples stocks fell after data showed retail sales unexpectedly fell in July. Maple Leaf Foods slumped 1.8 per cent and Loblaw Cos. slid 1 per cent to pace declines.
Raw-materials producers slipped 1.4 per cent. Barrick Gold Corporation and Goldcorp dropped more than 1.2 per cent. Silver Wheaton Corporation slumped 2.3 per cent and First Quantum Minerals fell 1.2 per cent.