UPDATE 2-Canadian annual inflation eases in June on energy

* Total CPI in line with forecasts, core below

* First month-on-month fall for CPI since Dec 2009

* Less pressure seen on Bank of Canada to raise rates
(Adds details)

OTTAWA, July 23 (BestGrowthStock) – Moderating energy prices helped
slow Canada’s annual inflation rate in June from May,
suggesting the central bank has breathing room to take a
gradual approach to future interest rate hikes.

The consumer price index dipped 0.1 percent in the month
for an annual rate of 1.0 percent, Statistics Canada said on
Friday. It was the first month-on-month decline for total CPI
since December 2009. The annual rate was in line with analysts
expectations. In May, consumer prices climbed 0.3 percent in
the month for an annual rate of 1.4 percent.

“At the margin, it could encourage the Bank of Canada to go
very slow, as far as raising interest rates,” said Sal
Guatieri, senior economist at BMO Capital Markets.

The Canadian dollar (CAD=D4: ) dipped briefly against the
U.S. dollar to C$1.0440 to the U.S. dollar, or 95.79 U.S.
cents, down from C$1.0425 to the U.S. dollar, or 95.92 U.S.
cents beforehand.

By 7:15 a.m. (1115 GMT), it had rebounded to trade at
C$1.0409 to the U.S. dollar, or 96.07 U.S. cents, but slightly
weaker than Thursday’s North American finish at C$1.0393 to the
U.S. dollar, or 96.22 U.S. cents.

Consumers paid 2.9 percent less for gasoline in June, the
first such drop in prices at the pump since October 2009, after
gas advanced 6.9 percent in May. Natural gas prices increased 3
percent in June after rising 4.7 percent in May. Overall,
energy prices rose 1.3 percent compared with a 6.2 percent jump
in the previous month.

Prices climbed for seven of eight major components, but not
for clothing and footwear.

The Bank of Canada raised interest rates for a second time
in as many months this week and cautioned of uncertainty in the
global recovery, cutting its domestic growth outlook but
keeping its inflation view unchanged. [ID:nN22256221]

Annual core CPI, which excludes volatile items like
gasoline and is closely watched by the central bank, was 1.7
percent, slightly below last month’s 1.8 percent and still
below the bank’s 2 percent target.

Analysts in a Reuters poll had forecast a 1.8 percent
annual core rate. Core CPI rose 0.1 percent in the month, the
same as the previous month.

“It also is a little bit below the Bank of Canada’s
estimate for the second-quarter. It also puts us a tad below
its forecast for the third-quarter,” said Guatieri.

Investment Advice

(Reporting by Ka Yan Ng and Louise Egan; Editing by Padraic

UPDATE 2-Canadian annual inflation eases in June on energy