Signage marks the Statistics Canada offices in Ottawa on July 21, 2010. THE CANADIAN PRESS/Sean Kilpatrick

Signage marks the Statistics Canada offices in Ottawa on July 21, 2010. THE CANADIAN PRESS/Sean Kilpatrick

Annual inflation cools to 2.2%; core measure above 2% for first time in 6 years

The upward pressure on inflation last month was led by higher costs for gasoline, air transportation and restaurants.

The country’s annual inflation rate cooled slightly last month but, at 2.2 per cent, it stayed hot enough to hover above the two per cent midpoint of the central bank’s ideal range, Statistics Canada said Friday in a new report.

Headline inflation for April was a little lower than the March number of 2.3 per cent, which was the rate’s strongest year-over-year reading since 2014. It matched the 2.2 per cent figure for February.

The upward pressure on inflation last month was led by higher costs for gasoline, air transportation and restaurants. The biggest downward forces came from cheaper prices for digital equipment, travel tours and natural gas.

Core prices, meanwhile, also continued their gradual, upward climb last month, the report said.

Related: Annual inflation rate rises to 2.2% for its fastest pace since fall 2014

The average of the Bank of Canada’s three measures of core inflation, which omits more-volatile items like pump prices, edged above the two per cent mark last month for the first time since February 2012. The core average was 2.03 per cent, up from 1.97 per cent the previous month.

The Bank of Canada carefully scrutinizes inflation numbers ahead of its interest-rate decisions. It can use rate hikes as a tool to help prevent inflation from climbing too high.

But recent readings are unlikely to have a major impact on an upcoming rate decision because governor Stephen Poloz has predicted inflation to remain above two per cent for all of 2018.

Last month, Poloz challenged the notion that two per cent represents some unbreachable barrier. With higher energy prices, he said it’s natural for the long-term trendline to balance itself out — and he called it a “positive thing.”

”What I don’t want is for people to spend this entire year asking what I’m up to because inflation is above target,” Poloz told reporters during a late-April visit to Washington, D.C..

“You need every once in a while to remind people there’s a range, and that’s okay. The policy allows for this. We’re not violating our target in some way.”

The bank’s inflation range is one to three per cent, but considerable attention is focused on where the rate sits relative to the two per cent midpoint.

Related: British Columbia’s economy is forecast to remain strong through 2020

Last month, the central bank raised its headline inflation projections as it pointed to the temporary effects of higher gasoline prices and minimum wage increases. The bank is now expecting inflation to average 2.3 per cent this year before settling back down to 2.1 per cent in 2019.

Poloz has raised the central bank’s benchmark interest rate three times since last July and is expected to remain on his rate-hiking path with the economy operating close to its capacity.

But last month the bank left its key rate at 1.25 per cent, where it has been since January.

Poloz said that the economy was still unable to maintain its pace without the stimulative power of lower rates, despite recent improvements.

The bank’s next rate decision is May 30, but many analysts have been predicting Poloz will wait until July before introducing another rate increase.

In a separate report Friday, Statistics Canada released its latest figures for retail trade, which showed an increase for a third-straight month with sales rising 0.6 per cent in March. Retail sales rose to a total of $50.2 billion.

Retail trade also saw increases of 0.5 per cent in February and 0.3 per cent in January.

The report said higher sales in March for vehicles and automotive parts — especially by new car dealers — more than offset weaker sales at food and beverage stores and gas stations. By excluding sales of vehicles and parts, retail trade would have contracted 0.2 per cent in March.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter.

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

Dr. Bonnie Henry gives her daily media briefing regarding Covid-19 for the province of British Columbia in Victoria, B.C, Monday, December 7, 2020. THE CANADIAN PRESS/Jonathan Hayward
BREAKING: Toddler marks youngest British Columbian to die related to COVID-19

Child one of eight people to die from virus this weekend

Vehicles line up for the Greater Vancouver Drive-Thru Food Truck Festival at the Chilliwack Coliseum parking lot on March 27. The touring event comes to Cloverdale this weekend, April 24-25 (Photo: Jenna Hauck/Chilliwack Progress)
Here are the food trucks coming to Cloverdale for a drive-thru festival this weekend

Nine trucks will be parked Saturday, nine Sunday during event at fairgrounds

Pharmacist Barbara Violo arranges all the empty vials of the Oxford-AstraZeneca COVID-19 vaccines that she has provided to customers at the Junction Chemist which is a independent pharmacy during the COVID-19 pandemic in Toronto, on Monday, April 19, 2021. THE CANADIAN PRESS/Nathan Denette
Parts of Surrey, North Delta to get AstraZeneca vaccines for people ages 40+

A total of seven communities in Surrey and Delta will be targeted

The Braidwood Band performs for the seniors at Zion Park Manor in Surrey, as part of a music program planned by Rick’s Heart Foundation. (submitted photo)
VIDEO: Surrey charity brings distanced concerts to care homes, with prop pink firetruck

Familiar tunes performed for seniors during pandemic-era ‘Heart for Music’ program

A new median has been built at the 40 Avenue and Highway 15 intersection. (Aaron Hinks photo)
Median installed at South Surrey ‘death trap’ intersection

New infrastructure prevents motorists from crossing 176 Street at 40 Avenue

Public health restrictions on non-essential travel and vacation bookings are being increased in B.C. (B.C. government)
Out-of-region B.C. vacation bookings, RV ferry reservations to be refused

B.C. extends COVID-19 indoor dining, group fitness ban until May 25

Sunday’s storm rocked one of the ferries crossing Kootenay Lake. Photo: Dirk Jonker
VIDEO: Storm makes for wild ferry ride across Kootenay Lake

The video was captured by ferry employee Dirk Jonker

Chakalaka Bar & Grill remains open in defiance of orders from Island Health to close. (Cole Schisler photo)
B.C. health authority seeks injunction against restaurant defying COVID-19 orders

Chakalaka Bar and Grill plans to continue serving customers without public health compliance

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

The Abbotsford Centre has the ability to host AHL level games if the Vancouver Canucks or any other NHL team chose to move its affiliate to the arena. (File photo)
Abbotsford Centre ready for AHL if right opportunity presents itself

Building recently upgraded glass and boards, schedule would allow for AHL tenant

Carver Ken Sheen had almost finished work on a large cowboy carving commissioned by the City of Williams Lake to replace the original overlooking the Stampede Grounds when fire broke out Friday, April 18 at his property between Williams Lake and Quesnel. (Pine River Carving Facebook photos)
Cow boss statue destined for Williams Lake Stampede Grounds goes up in flames

Carver Ken Sheen lost the statue, all his tools and his shop in the blaze

B.C. Labour Minister Harry Bains. (Hansard TV)
B.C. moves to protect employee pay for COVID-19 vaccination

Most won’t need to take time off work, labour minister says

Most Read