Inflation popped higher in February after months of muted price gains, driven by increased costs for gasoline, cars and groceries.
The country’s consumer price index rose 1.2 per cent in February from a year earlier, quickening from a 0.5-per-cent increase in January, Statistics Canada said Wednesday. It also climbed 1.2 per cent from a month earlier, the fastest monthly pace of inflation since 1991.
Inflation had slowed in prior months, in line with other signs of slumping economic growth, prompting analysts and investors to pare back expectations for when the Bank of Canada will raise interest rates. Despite the one-month pickup, the broad picture of soft prices remains.
“This doesn’t look to represent the start of a new trend of rising inflation, but does show that the very mild readings at the start of the year were an aberration,” noted Douglas Porter, deputy chief economist at BMO Nesbitt Burns.
Transportation costs led the annual increase, advancing 2 per cent, spurred by higher costs at the pump, and as rebates disappeared at car dealerships. Food prices accelerated to 1.9 per cent after a 1.1-per-cent gain in January as consumers paid more for meat and fresh fruit. The cost of fuel oil also rose.
Despite the recent gain, consumer-price increases remain at the tepid end of the Bank of Canada’s 1-to-3-per-cent inflation target, and that’s not likely to change in the coming year.
“The sub-par growth recorded in the second half of 2012 introduced more slack into the economy, resulting in downward pressure..on prices,” noted RBC economists. It’s likely “that readings of sub-2 per cent will persist until the latter part of 2014.”
The monthly gain in inflation is the largest since January, 1991, when the goods-and-services tax was implemented in Canada.
Among provinces, Newfoundland tallied the biggest increase in consumer prices, while the smallest gains were in Alberta and British Columbia.
Here are some other examples of what prices are up, and what’s down from a year earlier:
- Canned fish: 8.2 per cent
- Breakfast cereal: 4.5 per cent
- Apples: 7.7 per cent
- Lettuce: 21.2 per cent
- Water: 6.7 per cent
- Financial services: 4.2 per cent
- Gasoline: 3.9 per cent
- Fats and oils: –2.6 per cent
- Fresh or frozen fish: –4.6 per cent
- Mortgage interest costs: –4.2 per cent
- Appliances: –2.6 per cent
- Children’s clothing: –6.5 per cent