Inflation rate highest since before recession
- Olympic effect boosted headline gain
Canada's inflation rate rose to 3.3 per cent in the 12 months ending in March, the highest it has been since before the recession.
Economists polled by Bloomberg were expecting the figure to come in closer to 2.8 per cent.
Energy prices increased 12.8 per cent during the period, with gasoline prices specifically increasing by 18.9 per cent.
But prices increased on all eight components the agency tracks. Food increased 3.3 per cent as the price for fresh vegetables rose by 18.6 per cent.
|Province||March rate (%)||February rate (%)|
|Newfoundland and Labrador||3.2||2.9|
|Prince Edward Island||2.4||1.9|
"Alongside higher prices of food and energy, the 'Olympics' effect from the prior year strongly contributed to the headline gain," Scotiabank economist Derek Holt said in a note. Prices jumped temporarily in February 2010 in response to the Vancouver Winter Olympics, reversing course the following month.
Recreation, household operations, health and personal care, alcohol and tobacco, even clothing and footwear, which normally are downward contributors to inflation, all posted modest gains compared to their levels last year.
On an annual basis, consumer prices rose at a faster rate in every province in March compared with February. Nova Scotia led the way with a 3.9 per cent increase.
Excluding energy, the Consumer Price Index was 2.4 per cent higher in the 12 months ending March.
The Bank of Canada's core index, which strips out more volatile sectors, was 1.7 per cent higher in the 12 months to March, following a 0.9 per cent rise in February.
That's the index the bank pays closer attention to in setting its interest rate decisions. Last week, the central bank held its target for the overnight rate steady at one per cent, and most economists don't expect a hike to come until July at the earliest.
"We remain of the view that the Bank of Canada is in no danger of breaching its inflation target of two per cent," Holt said.