Investing.com - The overall rate of inflation in Canada picked up surprisingly strongly in December, giving some welcome respite to a central bank that was criticized earlier this month for being too hawkish with its monetary policy.
The consumer price index rose 2% last month from December 2017, Statistics Canada said on Friday. Prices fell by 0.1% from a month earlier.
Both monthly and annual readings were stronger than forecast. Economists had expected annual inflation to rise by 1.7% and monthly inflation to fall by 0.4%.
The Bank of Canada had said after its last policy-making meeting it still expects to have to raise interest rates this year to reach a 'neutral' policy level, that is, one that that neither stimulates nor depresses activity. Some analysts think that's too much for an economy that's already slowing under the effects of previous rate hikes and other measures aimed largely at reining in the housing market.
By contrast, U.S. Federal Reserve officials have indicated they will slow the pace of monetary tightening this year.
Core inflation, which excludes gasoline, was up 1.7% from a year earlier and fell by 0.2% from the previous month.
The Bank of Canada aims to keep inflation at 2%, the midpoint of a target range of 1% to 3% over the medium term.