Canada’s Inflation Rate Rises To 6.7%, A 31-Year High

Canada’s annual inflation rate rose to 6.7% in March, its highest level since January 1991.

Canadian consumer prices in March were up from 5.7% in February and exceeded the median

expectation of 6.1% among economists.

With inflation running at a three-decade high, it reinforces expectations that the Bank of Canada

will continue to aggressively raise interest rates to bring consumer price increases back down to

the 2% to 3% range targeted by the central bank.

The latest inflation report from Statistics Canada showed that prices rose by 1.4% in March

alone, the biggest one-month increase since the country introduced a federal sales tax in 1991.

While gasoline prices were the biggest contributor to the monthly and annual gain in consumer

prices, inflation has become broad-based with sharp increases in costs for housing, food and

cars. The average of the central bank’s core measures, which remove volatile food and energy

prices, rose to 3.77%, also the highest level since 1991.

On a seasonally adjusted basis, prices jumped 0.9% in March, matching a record high. Gasoline

prices were up 12% on the month, and 40% from a year earlier. Food prices rose 7.7% from a

year earlier, after a 0.9% gain in March. Grocery prices were up 8.7% on an annual basis.

Bonds were hit hard by the latest inflation numbers. The benchmark Canadian government two-

year yield rose to nearly 2.56%, the highest level since October 2008 and up from about 2.52%

before the consumer price numbers were released. The 10-year yield moved above 2.8% on the

news.

inflation
interest rates
central bank

Author: Baystreet.ca - Economic Commentary