OTTAWA: Canada’s annual inflation rate accelerated in March to 6.7%, a full percentage point higher than in February and well above expectations, driven by widespread price pressures, Statistics Canada data showed on Wednesday.
The rate is the highest since January 1991, when it hit 6.9%, and was above the Bank of Canada’s 1%-3% control range for the 12th consecutive month. Analysts surveyed by Reuters had forecast inflation would rise to 6.1% in March.
“Prices increased against the backdrop of sustained price pressure in Canadian housing markets, substantial supply constraints and geopolitical conflict, which has affected energy, commodity, and agriculture markets,” Statscan said.
The agency noted a very tight labor market is also driving wage inflation. Durable goods rose at their fastest rate since 1982, driven by vehicle and furniture prices.
Gasoline prices were up 11.8% on the month and 39.8% on the year, as oil prices surged in March following Russia’s invasion of Ukraine. Food prices jumped 8.7% on the year, with pasta and cereal products up sharply as wheat futures jumped, Statscan said.
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The CPI common measure, which the Bank of Canada says is the best gauge of the economy’s performance, rose to 2.8% from a revised 2.7% in February. CPI trim was 4.7% and CPI median was 3.8%.
The Bank of Canada last week raised interest rates by half a percentage point and said more hikes were coming to fight inflation. Governor Tiff Macklem said the Canadian central bank would continue to act “forcefully” if needed.
The Canadian dollar rose to a three-week high of 1.2517 to the greenback, or 79.89 U.S. cents, after the data.