Food and other price increases have pushed inflation in Canada to its fastest pace in 28 months.
The annual pace of inflation ticked up to 2.4 per cent in June from 2.3 per cent in May, Statistics Canada said Friday, though, on a monthly basis, consumer price increases slowed to 0.1 per cent.
Annual inflation now stands at its highest since early 2012.
So-called core prices, which strip out volatile items and help guide the Bank of Canada, also rose on an annual basis, to 1.8 per cent from 1.7 per cent.
Food prices continued to pick up last month, according to the statistics agency, rising 2.9 per cent from a year earlier, compared to the May pace of 2.3 per cent.
That was fed by a 3.2-per-cent jump in food purchased from stores, as meat spiked by 9.4 per cent and fresh vegetables by 9.5 per cent. And the cost of eating out at restaurants rose 2.3 per cent.
Shelter costs also drove the overall rise in prices, climbing 2.9 per cent. Breaking that down, costs for natural gas, property taxes and electricity all increased.
Transportation prices also played a role, rising 2.2 per cent from June, 2013, as the cost of filling up the tank rise 5.4 per cent, still an increase but a slower one than May’s 6.3 per cent.
There was an interesting twist where clothing and shoe costs were concerned. Those prices jumped 1.6 per cent because of fewer discounts, Statistics Canada said.
And on the sin side, cigarette costs surged 10.3 per cent as tobacco taxes rose in Quebec.
The Bank of Canada has suggested that the stronger pace of inflation in Canada of late is temporary.
“Over all, the small uptick in core inflation due to higher food inflation and exchange rate pass-through effects won’t concern the Bank of Canada because these temporary factors don’t reflect any fundamental improvement in domestic economic conditions,” said David Madani of Capital Economics in Toronto.
The pace of inflation does, however, raise questions about what the central bank thinks.
“Inflation continues to land on the high side of expectations, notably the Bank of Canada’s expectations,” said chief economist Douglas Porter of BMO Nesbitt Burns.
“And, the breadth is impressive, with more than 50 per cent of all categories now rising at a pace above 2 per cent,” he said in a research note.
“The persistently strong and widespread readings raise at least some doubts on just how ‘transitory’ this first-half burst in inflation is, and already puts the BoC’s fresh inflation forecast at risk. Still, today’s reading was not far out of bounds, and the bank remains ‘preoccupied’ by the downside risks to growth, so the latest updraft likely will not prompt any change in view in Ottawa.”