Go to the Globe and Mail homepage

Jump to main navigationJump to main content

Report on Business

Economy Lab

Delving into the forces that shape our living standards
for Globe Unlimited subscribers

Entry archive:

Economy Lab has moved

Only Globe Unlimited members will now have access to a wide range of insightful commentary
and analysis on the economy and markets previously offered on this page.


Globe Unlimited subscribers will be able to read these columns,
written by some of Canada’s most deeply respected economists,
such as Christopher Ragan, Sheryl King, Andrew Jackson, and Clement Gignac,
as part of our ECONOMIC INSIGHT section.


All of our readers will still be able to browse the Economy Lab archives and read our
broader coverage of economic data and news by accessing their 10 free articles a month.


Learn more about Globe Unlimited and how to subscribe.

A drop in gas prices was a welcome relief for consumers in April. (Gregory Bull/The Associated Press)
A drop in gas prices was a welcome relief for consumers in April. (Gregory Bull/The Associated Press)

Inflation reading forecast to dip on lower gasoline prices Add to ...

Sometimes it’s hard to remember that prices at the gas pump can and do fall, but they did last month, taking inflation along for the ride.

Economists expect Statistics Canada to report this week that the annual inflation rate dipped below 1 per cent in April, to somewhere between 0.5 per cent and 0.8 per cent.

“Canadian inflation looks to slow back below 1 per cent in April due largely to an unseasonal decline in gasoline prices,” said Benjamin Reitzes of BMO Nesbitt Burns.

“The big decline in the headline would leave inflation well below the Bank of Canada’s 1-per-cent forecast for all of [the second quarter], though both May and June should see some acceleration,” he added.

The so-called core rate of inflation, which strips out volatile items and helps guide the central bank, is expected to be 1.2 per cent on an annual basis when Statistics Canada releases its report Friday morning.

The Bank of Canada is widely expected to hold its benchmark rate at 1 per cent until late next year or early 2015, given the economic outlook and tame inflation.

“The persistently soft inflation readings are consistent with the wide output gap and strong [Canadian dollar],” said Mr. Reitzes.

“Until either of those factors dissipates, price pressures are likely to remain muted, leaving little need for the bank to come off the sidelines.”

Tame prices are, of course, good news for families juggling record debt levels amid an uncertain economic outlook.

“Weak inflationary pressures have been a welcomed relief for consumers, providing them with a boost to purchasing power in an environment of subdued wage growth and slowing economic activity,” said CIBC World Markets.

“That theme was likely seen yet again in April, when a drop in gasoline prices triggered a sharp deceleration in inflation. Subdued price pressures elsewhere including food and mortgage interest costs likely also weighed on the headline.”

Editor's note: This article has changed from the original version.

In the know

Most popular videos »

Highlights

More from The Globe and Mail

Most popular