Canada inflation unexpectedly slowed to 0.7% annual rate in December 2020

Canada's consumer price inflation decelerated to an annual rate of 0.7% in December 2020 from 1.0% in November amid renewed uncertainty brought by further restrictions or lockdowns imposed across the country's regions to contain the spread of COVID-19, the latest data from Statistics Canada showed.

The annual inflation rate came in below the consensus estimate of economists polled by Econoday, which was for an annual inflation rate of 1.0%.

Shelter prices rose 1.6% year over year, while air transportation prices fell 14.5% due to lower demand for air travel. Food prices gained 1.1%, a slower pace of growth compared with the 1.9% increase in November.

Energy prices fell 4.0% as gasoline prices dropped 8.5%. Excluding energy, the consumer price index increased 1.1%. Excluding food and energy, the index also rose 1.1%.

On a month-over-month basis, consumer prices fell 0.2% in December, compared with the Econoday consensus estimate of a 0.1% increase.

In 2020, consumer prices rose at the slowest pace since 2009, increasing 0.7% on an average annual basis, following an increase of 1.9% in 2019.