Farms.com Home   News

Higher February Inflation Rate Clouds Interest Rate Outlook

Canadian inflation ran hotter than expected in February, even before the impacts of a potential trade war with the US are felt. 

Statistics Canada reported Tuesday the consumer price index was up 2.6% year-over-year in February. That followed a 1.9% increase in January and exceeded the expectations of most analysts and economists. The increase also comes before consumers face the likelihood of higher prices caused by the imposition of US tariffs and Canadian retaliatory tariffs. 

The higher inflation rate also casts considerable uncertainty over what course the Bank of Canada will now chart with interest rates. The Bank last week cut its key overnight lending rate by 25 basis points to 2.75%, partly due to economic jitters caused by the possible trade war. However, a trade war could also further increase consumer prices while also dampening economic growth, putting the Bank in a difficult position. Typically, the Bank will increase interest rates to control inflation and reduce rates to stimulate economic growth. 

In its report today, StatsCan said the end of the federal government’s tax break on certain items, as of Feb. 15 contributed to last month’s higher inflation rate. For example, prices for food purchased from restaurants declined at a slower pace year over year in February (-1.4%) compared with January (-5.1%). In fact, it was restaurant food prices that contributed the most to the acceleration in the all-items CPI in February, StatsCan said. 

Click here to see more...

Trending Video

Verbio | Anaerobic Digestion on the Farm Virtual Tour

Video: Verbio | Anaerobic Digestion on the Farm Virtual Tour

VERBIO Vereinigte BioEnergie AG (VERBIO AG), headquartered in Leipzig, Germany, is a leading independent manufacturer of biofuels and bioenergy in Germany and Europe. The company began producing biofuel in 2001 and today has approximately 1,000 employees at its locations in six countries producing biodiesel, bioethanol and renewable natural gas, as well as feed, bio-fertilizers and other highvalue by-products for the nutrition, pharmaceutical and cosmetics industries. The Verbio North America site, located in Nevada, IA, is committed to the principle of sustainability and treats natural resources in a socially responsible and ethical manner. Using the latest technologies developed in-house, the Verbio team is creating sustainable alternatives for a world whose desire is to move away from fossil fuels. Verbio’s business model attempts to ignite change and create platforms where the path to green energy is contagious.