Canada inflation steady at 2.2pc
Friday, 20 July 2007
OTTAWA, July 19 (AFP): Consumer prices in Canada increased by 2.2 per cent in June, compared with June 2006, with identical hikes in both April and May, Statistics Canada said yesterday.
Inflation was lower than expectations, but analysts said the central bank is still likely to increase interest rates another notch in the coming months, following its first increase in a year only last week.
"Everything depends on the Canadian dollar. If the dollar remains at its current level, I believe that an interest rate hike is likely," said Marc Levesque of TD Securities.
The Bank of Canada increased its key lending rate by 0.25 percentage points to 4.50 per cent last week and signaled a further hike looms.
The Canadian dollar, meanwhile, has been soaring, hitting 0.9582 US dollar Tuesday, curbing manufacturers' exports.
June inflation was due primarily to higher home ownership costs and an increase in the cost of buying or leasing vehicles, Statistics Canada said.
A drop in computer equipment price exerted downward pressure on average prices, the government agency said.
On a monthly basis, inflation fell 0.2 per cent between May and June after rising 0.4 per cent between April and May - the first monthly decline since October 2006, due to falling gasoline and clothing prices.
Inflation was lower than expectations, but analysts said the central bank is still likely to increase interest rates another notch in the coming months, following its first increase in a year only last week.
"Everything depends on the Canadian dollar. If the dollar remains at its current level, I believe that an interest rate hike is likely," said Marc Levesque of TD Securities.
The Bank of Canada increased its key lending rate by 0.25 percentage points to 4.50 per cent last week and signaled a further hike looms.
The Canadian dollar, meanwhile, has been soaring, hitting 0.9582 US dollar Tuesday, curbing manufacturers' exports.
June inflation was due primarily to higher home ownership costs and an increase in the cost of buying or leasing vehicles, Statistics Canada said.
A drop in computer equipment price exerted downward pressure on average prices, the government agency said.
On a monthly basis, inflation fell 0.2 per cent between May and June after rising 0.4 per cent between April and May - the first monthly decline since October 2006, due to falling gasoline and clothing prices.