Sherry Cooper Prices Quotations

Further widening in the trade deficit in the months ahead is very likely given that the surge in oil prices will drive imports higher and that there has been no let-up in the domestic economy.

Overall, this can be viewed as more evidence that the consumer is hanging in well despite the run-up in oil prices and growing equity market volatility.

Right now, the acceleration in commodity prices tips the scales for a 16th and a 17th rate hike by the Fed.

While the rise in core prices is a bit uncomfortably high, this stand-alone report is not evidence that soaring energy prices are feeding into other prices.

The biggest risk (to energy supplies) is natural gas prices because there is no meaningful emergency inventory,

Armed with the weaker U.S. dollar, commodity prices heading north, and a strengthening economy, rising inflation pressure is still likely to emerge as a concern for the Fed. But not yet. Not yet.

In a vibrant economy, you will always have some prices rising and some falling. That's a good thing, and that's what seems to be happening at this stage.

High energy prices keep on working their way through the system. The risks remain skewed to a mild up-creep in core inflation during the months ahead, which will keep the Fed on track for another rate hike in March and likely in May.

However, there are deepening questions as to how far they will go beyond that point, especially given the looming hit to growth from the spike in oil and gas prices and the renewed Canadian dollar rise.

The great post-Katrina inflation scare has vanished, with gasoline prices coming back down to Earth and core inflation on track to match the Bank of Canada's latest estimate of 1.6 per cent for Q4.