Canada: Inflation comes in at highest level since May 2011 in April
May 19, 2021
Consumer prices rose a seasonally-adjusted 0.58% in April over the previous month, accelerating from the 0.14% increase logged in March. April's reading was the sharpest increase in prices since June 2020. Looking at the details of the release, prices for alcoholic beverages and tobacco products, household equipment, and clothing and footwear all rebounded in April.
Inflation came in at 3.4% in April, above March’s 2.2%, and represented the highest inflation rate since May 2011. Annual average inflation rose to 0.9% in April (March: 0.6%). Lastly, core inflation rose to 2.3% in April from March’s 1.4% increase.
Commenting on the latest reading, Royce Mendes, a senior economist at CIBC World Markets, noted:
“Supply constraints and the varied timing of recovery in demand across categories is creating more volatility than we had expected. This is likely to continue, particularly if the Canadian economy sees price pressures as it reopens similar to those in the US. However, it’s still likely that this will all end up being transitory, and the Bank of Canada will be able to stick with its plan of keeping rates on hold until the latter half of 2022.”