Could the U.S. Have Inflation While Canada Experiences Deflation?

It appears Canada avoided deflation for now:

Canada’s annual rate of inflation edged higher in May due to lower energy prices than a year earlier that outweighed a rise in food costs.

Statistics Canada said Thursday the consumer price index rose 0.1% from a year earlier, after a 0.4% annual increase in April.

The slight increase in inflation came despite expectations that the country would dip into deflation in May. Economists had expected the annual inflation rate to come in at minus 0.2% in May.

Like many (but not all) economists, I expect to see rising levels of inflation in the United States thanks to massive increases in the money supply over the past few years. I particularly expect this to manifest itself through higher commodity prices, such as the price of oil.

Recall that the oil prices in U.S. dollars and the value of the Canadian dollar are highly positively correlated. The Canadian dollar will rise as oil prices rise, lowering the price of imported goods. Oil prices, when priced in Canadian dollars may or may not be higher, but the prices of other imported goods will almost certainly be lower. So it is, at least theoretically, possible for rising commodity prices to cause deflation.