Canada...
Prices take biggest drop in 42 years
nationalpost.com
'Jaw-dropping' decline leaves inflation at 0.7%; room for another rate cut, economists say
Jacqueline Thorpe
Financial Post
Consumer prices took their biggest tumble since 1959 in November, slicing the annual inflation rate by more than half in what analysts say is a clear signal of an economy in distress.
Statistics Canada reported its consumer price index slid 0.9% for the month, after a 0.5% drop in October. The plunge shocked economists, who had been expecting a decline of only 0.2%.
The annual Canadian inflation rate fell to just 0.7%, down from 1.9% in October.
"The extent and broad-based nature of the price decline last month was absolutely jaw-dropping," said Sherry Cooper, chief economist at BMO Nesbitt Burns.
With prices declining across the board -- sparking speculation that outright deflation may be brewing -- economists said the Bank of Canada had yet another reason to cut interest rates by a hefty half percentage point at its next policy announcement on Jan. 15.
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However, the BOC has repeatedly said they prefer to look at the core CPI (which excludes the eight most volatile components fruit, vegetables, gasoline, fuel oil, natural gas, mortgage interest, inter-city transportation and tobacco products)
Excluding the November Data, The Core CPI shows a relatively steadily rising line since November of 2000.
bank-banque-canada.ca
bank-banque-canada.ca
I would be weary of a rate cut here, until a more definite down trend is established.
Regards,
Jay |
