For example, total inflation is currently being pushed down by the impact of lower energy costs. In contrast, core inflation, which strips out the most volatile inflation components, is facing upward pressure because recent declines in the exchange rate are boosting the prices of imported goods. However, we expect these to be one-off effects, and, as such, we would look through them.
As we noted in our July Monetary Policy Report, when all the temporary factors are stripped out, the underlying trend in inflation in Canada is in the range of 1.5 per cent to 1.7 per cent, below our target of 2 per cent.