2018.05.2019:17:00UTC+00Canada Inflation Slows Slightly in April

Canadian inflation cooled slightly in April, supporting expectations the central bank will hold interest rates steady later this month and weakening the Canadian dollar.

Canada's consumer-price index increased 2.2 percent on a one-year basis in April, according to Statistics Canada, following a 2.3 percent rise in March. The April result was slightly lower than expectations of a 2.3 percent increase, according to economists as Royal Bank of Canada.

Underlying inflation strengthened as two out of three of the central bank's core inflation measures increased, leaving them at an average 2 percent.

A drop in the cost of travel services and a moderation in gasoline prices weighed on overall inflation, while higher costs for clothing and food helped to counterbalance the softness elsewhere.

Among the core inflation measures, CPI common, which the central bank says is the best gauge of the economy's underperformance, remained at 1.9 percent.

CPI median, which shows the median inflation rate across CPI components, and CPI trim, which excludes upside and downside outliers, both increased to 2.1 percent.

The numbers were broadly in line with economist expectations and may reinforce the Bank of Canada's outlook that inflation will remain in check even as gasoline prices rise and wages are picking up with unemployment at the lowest in decades.

The central bank forecasts a temporary quickening of inflation in coming months on gasoline prices, projecting an overall average pace of 2.3 percent this year will return to near the bank's 2 percent target in 2019.

The Bank of Canada has hiked interest rates three times since July, and Governor Stephen Poloz has warned rates are bound to continue increasing given the economy is close to its potential. Future hikes by policy makers will be determined by factors including U.S. trade policy, Canada's ability to cope with higher borrowing costs and whether inflationary pressures accelerate more quickly than expected.