Canada’s inflation rate crept up one-tenth of a point to the Bank of Canada’s preferred level of 2 per cent last month as the cost of most consumer items rose moderately.
The big surprise in a generally flat report from Statistics Canada was that energy costs – once the prime mover to some sharp fluctuations in the consumer price index – have a become a non-factor in the overall annual inflation picture.
For the first time since October, 2009, energy costs rose at a lower rate than the overall index with a tiny 1.1 per cent increase from last year.
Statistics Canada noted that gasoline had been rising in recent months, pushing April’s gasoline index to its highest level since July 2008, but that on a year-to-year basis, the increase was the smallest since September 2010. That’s because gasoline prices hit near record levels last April, it said.
On a monthly tracking, consumer prices rose 0.4 per cent in April from March as the cost of gasoline increased by 3.2 per cent in a month. It was the fourth consecutive time that prices have risen by the same amount on a monthly basis.
Regionally, inflation was highest in Newfoundland at three per cent and lowest in Alberta, where the annual rate dipped to 0.8 per cent on falling costs for electricity and natural gas.
In April, prices rose year-over-year in all eight of the major groups that Statistics Canada tracks, led by transportation, which increased by 3.4 per cent, and food, which cost 2.5 per cent more.
Other major contributors to inflation included the price of passenger vehicles, 3.4 per cent higher than last year, and gasoline, up 3.3 per cent.
As well, household operations, furnishings and equipment rose 2.6 per cent, clothing and footwear increased 2.4 per cent, car insurance costs were up 3.6 per cent, and shelter costs edged up 1.1 per cent.
There were some big outright declines in the prices. Natural gas fell 13.9 per cent, fresh vegetables 9.9 per cent, video equipment 12.8 per cent, and computer equipment, software and supplies decreased 6.6 per cent.
The report will cause few concerns at the Bank of Canada, whose mandate is to keep inflation as close to two per cent as possible and within a band of one-to-three per cent. The central bank’s core inflation index – excluding volatile items such as energy and some fresh foods – rose two-tenths of a point to 2.1, but was still well within the comfort zone.
Bank governor Mark Carney had cited building inflation pressures as one factor in his signal last month that he may be eyeing raising interest rates in the near future, but analysts believe the state of the economy, rather than consumer prices, will be the key factor in any decision from the central bank.