OTTAWA, Canada – Canada’s inflation rate fell to 0.9% in March amid a pandemic lockdown and a sharp drop in oil prices, the government statistical agency said on Wednesday, April 22.
The year-over-year rate was lower than analysts forecast, after prices rose 2.2% in February and then “decelerated the most since September 2006,” said Statistics Canada.
The slowdown was mainly due to an 11.6% drop in energy prices that saw consumers pay significantly less for gasoline and other fuels, it said.
Oil prices plummeted “as a result of lower demand as global economic activity, trade and travel slowed in response to the COVID-19 outbreak, as well as an oversupply of oil amid tensions between oil-producing nations.”
The crisis in the oil markets caused by the coronavirus was compounded by a price war between Russia and Saudi Arabia.
While the pair drew a line under the row and led producers into slashing output by 10 million barrels a day, that has not been enough to prevent historic price falls.
Despite the cuts and low demand, production is still high and storage is nearing a bursting point.
Excluding energy, Canada’s Consumer Price Index actually rose 1.7% in March.
Services were impacted by travel advisories and flight suspensions aimed at slowing the spread of COVID-19.
Prices hikes for travel tours and airfare rose less in March than in February, while the costs of hotel accommodations and car rentals, as well as train, city bus, and subway rides fell due to “reduced demand for travel within Canada,” said Statistics Canada.
This “coincided with increasing emphasis on physical distancing, including the cancellation of major events and advisories against non-essential travel,” the agency said. – Rappler.com
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