TORONTO – Prices increased in April at the fastest annual rate in nearly a decade as gasoline prices posted a record year-over-year rise and inflation continued to rebound from the plunge at the start of the COVID-19 pandemic, reported Canadian Press.
The annual pace of inflation rose to 3.4 per cent in April, Statistics Canada reported Wednesday, up from a 2.2 per cent year-over-year increase in the consumer price index in March.
The increase in April set a new pandemic-era high for the third time in as many months and was the highest reading since May 2011, when the consumer price index posted a year-over-year gain of 3.7 per cent.
Gasoline prices in April were up 62.5 per cent on a year-over-year basis, the largest annual increase on record as prices at the pumps rebounded from an 11-year low in April 2020.
Removing gasoline prices, Statistics Canada said annual inflation for April would have clocked in at 1.9 per cent.
The headline inflation figure wasn’t a surprise given its comparison to the worst of the economic downturn last year when prices fell in April and May. Statistics Canada said that effect on the price index, which measures the change in prices on a variety of goods and services, should be temporary.
Benjamin Reitzes, BMO’s director of Canadian rates, agreed that high inflation likely won’t persist until the economy fully reopens and unemployment rates drop, but said it could rattle nerves if the trend outlasts the temporary effects.
“Then you’ll start to hear the volume pick up a little bit more about concern about more persistent inflation,” he said. “Then what you’re going to see are central banks really changing their tune _ but we’re not there yet.”
Last week, Bank of Canada governor Tiff Macklem said he didn’t think a high reading in April would require immediate action by the central bank.
“Large parts of our economy remain very weak,” he told reporters following a speech to university students in Atlantic Canada last week. “There are far too many Canadians unemployed, and that is putting downward pressure on inflation. So, yes, we expect it to go up to around three (per cent) and then diminish thereafter.”
Statistics Canada said the average of the three measures for core inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 2.1 per cent for April, up from 1.93 per cent in March. The reading April was the highest seen since June 2009.
Courtesy Canadian Press