The recent sizable depreciation of the Canadian dollar will also provide an important offset to the effects of weaker global demand and lower commodity prices. With excess supply projected to build throughout 2009, and with lower assumed energy prices, inflationary pressures will ease significantly relative to the projection in the July Update.
Core inflation is now projected to remain below 2 per cent until the end of 2010. Total CPI inflation should peak during the third quarter of 2008, fall below 1 per cent in mid2009, and then return to the 2 per cent target by the end of 2010.