Bank of Canada should take stock of the impact its hikes have already had and will soon have on the economy and on inflation. Read on.
On the other hand, because headline inflation measures price increases over the previous 12 months, these numbers mainly reflect changes that took place a while ago and have little bearing today. To get a better feel of what is going on right now, we can look at shorter frequency changes. One option is to take the month-over-month growth in prices and see what inflation would look like if the latest monthly reading continued for a year.
Doing that back in March, April and May would have given us inflation over the next year as high as 13 per cent. In June, however, the forecast would have been down toand in August to just 0.8 per cent — July and August being below the Bank’s official target of two per cent. In September, however, extrapolating the monthly number for 12 months would have produced 4.8 per cent inflation.
Another option is to look at the three-month growth rate in prices and use that to derive an annualized rate. Doing that eliminates the September bump, with headline inflation coming in at 2.4 per cent , though without food and energy it was 4.9 per cent. That latest value is high but it doesThat’s all very encouraging. Unfortunately, at the moment food prices are bucking the downward trend. Month-over-month they increased at an annualized pace of 14.
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