But when it comes to assessing the pressures of aggregate demand on capacity - a key component of inflation dynamics - it is real GDP that matters. I would now like to turn to how Canada has fared in adjusting to the recent terms-of-trade shock.
However, the unemployment rate, although on a declining trend, still remains very high (June 2017: 21.1%). Turning to prices, deflationary pressures were contained in 2016, while in the first seven months of 2017 prices recorded a mild increase. Over the period 2017 to 2019, inflation is expected to be around 1%.