When Canada’s consumer price index or inflation rate came out, we saw a hopeful sign. The rate had fallen.
But the CPI – the most watched metric of inflation – marks the end of the supply chain but it can also be influenced by inflation that is showing up in all the steps along the way. Raw materials are subject to inflationary pressures as well as industrial or component prices that go into the final price that ultimately makes it to the consumer.
So, it is important to not only look at the tail end of the chain but what’s going on along the way as well. We have just received those numbers and here is where the good news on the inflation front may lie.
The Industrial Price was virtually unchanged in March compared to February but actually declined nearly two per cent compared to a year earlier. So, it is moving in the right direction.
The raw material index delivered an even more impressive storyline with a two-point pull-back for the month which translates into a decline of 16 per cent in the past year.
