Friday, January 24, 2014

Canadian Consumer Price Inflation

Canadian consumer prices rose 1.2 per cent in the twelve months to December, a modest increase from 0.9 per cent inflation in November.  The Bank of Canada's index of core inflation, which strips out the most volatile components of the CPI, such as food and energy prices, increased 1.3 per cent in December. Consumer prices in BC were unchanged in December on a year-over-year basis.

The Bank of Canada's repeated messaging around downside risks to inflation continue to have their desired effect. The five-year Government of Canada bond yield, the key benchmark for fixed mortgage rate pricing, has now fallen over 30 basis points since the beginning of the year to under 1.6 per cent, prompting lenders to cut posted mortgage rates. While we still anticipate that mortgage rates will be higher at the end of the year, a continued low-rate environment early in the year should provide a boost to the market heading into the spring home-buying season.


Copyright BCREA – reprinted with permission 

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