Canada's inflation rate rises to 4.4%, higher than expected
This is the first rise in the consumer price index since it peaked at 8.1% in June last year.
Canada’s inflation rate rose to 4.4 per cent in April, higher than the month before and topping economists’ expectations.
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Canada's inflation rate rises to 4.4%, higher than expected Back to video
Economists had expected the rate to fall to 4.1 per cent from 4.3 per cent in March. This is the first rise in the consumer price index since it peaked at 8.1 per cent in June last year.
Month-over-month, the CPI was up 0.7 per cent, higher than the forecast 0.4 per cent gain.
Inflation drivers were mortgage interest costs, which were up 28.5 per cent from a year ago because of higher interest rates. Rents, up 6.1 per cent, also pushed up the headline rate.
Grocery prices were up 9.1 per cent from a year ago, cooler than the 9.7 per cent increase in March.
Gas prices rose 6.3 per cent on the month, though they are still down 7.7 per cent from a year ago when oil prices soared at the onset Russia’s invasion of Ukraine.
The average of the three core measures of inflation tracked by the Bank of Canada cooled to 4.7 per cent in April from 4.97 per cent in March.
“While the first big leg down in inflation was quick and relatively easy, this next stage is, not surprisingly, proving to be quite a bit tougher,” BMO senior economist Robert Kavcic wrote after the data came out.
“Wading through all the moving parts suggests underlying core inflation is settling in around four per cent, which is clearly still too high for the Bank of Canada’s comfort.”
The Bank of Canada has been on hold since January, watching the data to see if its aggressive series of rate hikes over the past year will be sufficient to bring inflation back to its two-per-cent target.
The central bank expects the annual inflation rate to come down to about three per cent in coming months, but suggested that a return to two per cent will take longer.
CIBC chief economist Avery Shenfeld said even though the consumer price index accelerated by just a single tick, it would still be “a bit of an eyebrow raiser for those counting on steady progress.”
“Two-year yields were higher after the release, as the risk of a return to rate hikes at the next MPR release can’t be ruled out, as staying on hold is now very dependent on seeing a slowdown in the labour market,” he wrote in a note after the data was released.
Additional reporting by Canadian Press, Reuters
