Data from Stats Canada showed that inflation unexpectedly accelerated in the last month of 2018. Sharper costs for phone services and food were offset by lower gas prices, which pushed up the average inflation rate for all of 2018 to the highest level in seven-years.
Canada’s December CPI print rose +2% y/y vs. a +1.7% rise in November. The market was expecting a no change of +1.7% on the month.
For all of 2018, CPI rose +2.3%, following gains of +1.6% in 2017 and +1.4% in 2016.
The Bank of Canada (BoC) preferred measures for inflation was unchanged compared to November, with the average annual gain for the three core-inflation gauges holding firm at +1.9%. BoC sets rate policy to achieve and maintain +2% inflation.
USD/CAD has come under pressure since the release, -0.22% to C$1.3244
Other data releases showed that foreign investment in Canadian securities accelerated in November compared to the previous month, with the focus of their purchases in government bonds.
Non-resident investors bought a net +C$9.45B in Canadian securities in November vs. the previous month, when foreigners bought a net +C$3.97B.
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