Gas prices spike at fastest pace since May 2008
Consumer prices increase by 1.2% in the year ending in February
Much higher gasoline prices pushed Canada's annual inflation rate up to 1.2 per cent in February, a sharp rise from the previous month's level but still well within policymakers' acceptable range.
Consumer prices increased by 1.2 per cent in the year that ended in February, more than double the annual rate of 0.5 per cent in January, Statistics Canada reported Wednesday.
Much of the increase was attributed to higher transportation prices, which were up two per cent. That was a turnaround after a 0.5 per cent decline in January.
Gasoline prices rose 8.4 per cent in February, the largest monthly increase since May 2008, Statistics Canada reported.
Highest monthly increase since 1991
Prices were higher in every province, but Newfoundland and Labrador saw the highest increase. Consumer prices rose by the smallest amount in Alberta and B.C.
The 0.7 per cent jump in the overall inflation rate is the largest monthly increase in more than 20 years. But even after an increase of that size, Canada's inflation rate is still well within an acceptable range.
"Inflation pressures remain muted," Royal Bank economist Dawn Desjardins said in a note following the release of the data, adding that she doesn't expect the rate to get above two per cent this year.
The Bank of Canada likes to see the inflation rate hover between one and three per cent in guiding its policy decisions.
Besides gasoline and cars, clothing prices increased by five per cent from January to February, food by 0.9 per cent, led by a 6.4 per cent jump as fresh vegetables, while travel accommodation rose by 4.5 per cent.
Restaurant meals were 2.2 per cent more expensive, food cost 1.9 per cent more, rental costs went up by 1.6 per cent, homeowner replacement costs rose by 2.3 per cent and alcohol and tobacco increased by two per cent over the month.
Some items in the CPI basket cost less than they did a year ago. With interest rates remaining at rock-bottom levels, mortgage interest costs were down 4.2 per cent in February from a year ago, video equipment cost 10.2 per cent less, children's clothing was 6.5 per cent lower and digital computing equipment and devices were 5.1 per cent cheaper, Statistics Canada said.
With files from The Canadian Press