The surge in investment not only has restrained costs, it has also increased industrial capacity faster than the rise in factory output. The resulting slack in product markets has put greater competitive pressure on businesses to hold down prices, despite taut labor markets. Purchasing managers have been reporting virtually no material shortages for more than three years.
In fact, the Bank of Canada monitors a number of inflation measures and uses core inflation as an "operational guide" in coming to its monetary policy decisions and discussing these decisions with the public. Does it make sense for a central bank to concentrate on core inflation?