Inflationary pressures continued to ease last month in Manitoba as the province’s annual inflation rate fell for the third straight month.
Statistic Canada said today that Manitoba’s rate fell to 2.2 per cent from 2.5 per cent in September. That continued a trend which also saw the rate fall to 2.7 per cent in August from its peak of 3.0 per cent in July.
But despite the further drop, Manitoba continues to have the highest annual inflation rate in the country — a dubious distinction it has held for much of 2013. The rate here was still more than triple Canada’s annual inflation rate for October, which was 0.7 per cent.
Some of the major contributors to last month’s further easing in inflationary pressures were a 7.9 per cent decline over the past year in the cost of prescribed medicines, a 6.9 per cent drop in gasoline prices, a 3.8 per cent decline in the cost of personal care supplies and equipment, and 2.9 per cent reduction in the cost of men’s clothing.
Nationally, a big drop in the price of gasoline and declines in several other goods and services pushed down Canada’s annual inflation rate to its the lowest level since last May.
The country’s rate was down four-tenths from September’s already low 1.1 per cent and below the 0.9 per cent rate that analysts had been expecting.
On a monthly-to-month basis, the agency said prices overall fell 0.2 per cent from September.
Although there were several factors underlying the decline, the biggest reason was gasoline, which plunged by 5.1 per cent from September and by 4.3 per cent from October 2012.
"Lower gasoline prices were a factor in all provinces in October, with Saskatchewan (-8.6 per cent) recording the largest year-over-year decrease and Ontario (-1.8 per cent) posting the smallest," the agency said in a release.
The other side of the picture was there were few goods and services where price pressures appeared to be building significantly last month.
The Bank of Canada cited the persistent low inflation for its decision last month to jettison a long-standing bias towards raising interest rates. The change suggested governor Stephen Poloz and his advisers were worried that the economy was weaker than previously thought.
It’s doubtful that October’s surprisingly low inflation rate will, by itself, cause the central bank to consider a rate cut in next month’s policy announcement.
The bank puts a lot of store on core inflation, which strips out volatile items such as energy and some food, and that measure only declined slightly to 1.2 per cent in October, from 1.3 in September.
While lower than the bank’s ideal of 2.0 per cent annual inflation, core inflation is still safely within its acceptable range of 1.0 per cent to 3.0 per cent.
Still, the overall inflation picture in Canada remains the tamest in years.
— Staff/Canadian Press