By Leah Schnurr
OTTAWA, April 22 (Reuters) - Canadian retail sales
unexpectedly rose in February, the second consecutive monthly
increase, brightening the outlook for an economy that is on
track to rack up strong growth in the first quarter.
Separate data from Statistics Canada on Friday showed
Canada's annual inflation rate dipped toward the lower end of
the central bank's target range largely due to lower gasoline
prices.
But economists were focused on the 0.4 percent rise in
February's retail sales, which bested forecasts for a decline of
0.8 percent.
Sales volumes, which remove the effects of price changes,
posted an even more robust 1.5 percent gain.
Recent data has suggested that Canada's economy slowed in
February after a strong start to the year, but the retail sales
report suggested the consumer sector was the exception.
Economists still expect relatively robust economic growth
for the first three months of the year as the country bounces
back from the slump in oil prices that triggered a mild
recession last year.
"This is turning out to be a rather strong quarter for the
consumer and a strong quarter overall for broad GDP growth,"
said Derek Holt, an economist at Scotiabank.
The Canadian dollar added to gains against the greenback
immediately after the reports, while traders did not alter their
expectations that the Bank of Canada is likely to keep interest
rates unchanged for now. CAD/ BOCWATCH
Consumers bought more cars and clothes in February, though
gains were broad with higher sales in nine of 11 sectors.
Canada's annual inflation rate fell to 1.3 percent in March
from the previous month's 1.4 percent. Analysts had expected
inflation to be 1.2 percent last month.
On a year-over-year basis, the gasoline component was down
13.6 percent. Excluding gasoline, the inflation rate was 1.9
percent.
Overall, prices were up in six of the consumer price index's
eight major components, with food and shelter leading the way
higher. Food prices rose 3.6 percent as consumers paid more for
fresh fruit, vegetables and meat than they did a year ago.
Core inflation, which strips out some volatile items and is
closely watched by the Bank of Canada, was 2.1 percent, up from
1.9 percent in February.
The central bank has an inflation target of 1 percent to 3
percent, but it has said it is looking through some of the
temporary factors that are currently impacting the rate.
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Graphic - Canada inflation, central bank rate: http://link.reuters.com/cut67s
Graphic - Canada economic dashboard: http://graphics.thomsonreuters.com/15/sc-canada/index.html
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