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Inflation Remains Muted and Retail Sales Fall

Mar 22, 2019

The Conference Board of Canada’s Economics Director Matthew Stewart offers the following insights on today’s consumer price index and retail sales data:


“Inflation remained weak in February and retail sales declined for the third month in a row. This slow start to the year is inline with our latest forecast which calls for only modest economic growth this year. Against this backdrop, the Bank of Canada will not lift interest rates this year.”
—Matthew Stewart, Director, National Forecast, Forecasting and Analysis, The Conference Board of Canada


  • Inflation increased 1.5 per cent in February—up slightly from the 1.4 per cent gain recorded in January. Excluding gasoline, price growth held steady at 2.1 per cent.
  • The impact of past interest rate increases continues to push up mortgage interest costs which increased 8.1 per cent compared to last year.
  • Notably, the average of the Bank of Canada’s core measures of inflation eased last month to 1.8 per cent growth compared to 1.9 in January.
  • This morning’s retail sales data provided the first glimpse of how consumer spending fared at the beginning of 2019 and the news was not good as retail sales posted their third consecutive decline.
  • The decline was in large part driven by fewer purchases of motor vehicles and parts—excluding that category, retail sales nudged up by 0.1 per cent.
  • After removing the affects of inflation, retail spending was flat in the month. Despite the weak retail reading, that does not mean that consumer spending is on track for no growth this quarter. As outlined in our new Canadian Outlook, household purchases of durable goods are expected to decline this year while spending on services remains strong.
  • With inflation remaining muted and little upside risk to our latest forecast, which calls for subdued economic growth, the Bank of Canada will have no reason to lift interest rates this year.

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