Canada: Inflation increases to highest level since January 2020 in March
Consumer prices rose a seasonally-adjusted 0.07% in March over the previous month, after rising 0.14% in February. The reading was driven by moderating price pressures for transportation and food.
Inflation increased to 2.2% in March from February’s 1.1%. March’s reading marked the highest inflation rate since January 2020. Annual average inflation rose to 0.6% in March (February: 0.5%). Core inflation rose to 1.4% in March from the previous month’s 1.2% increase.
Commenting on the latest reading, Royce Mendes, a senior economist at CIBC World Markets, noted:
“Canadian inflation data has entered the phase in which it will be virtually useless to look at year-over-year comparisons when commenting on prices. The very weak readings during the first wave are making it easy for prices to post huge jumps relative to those twelve months ago. As a result, the Bank of Canada won’t be too fussed about the surge in inflation, which could even top 3% in the data for April. Rather, central bankers will be focused on continuing to provide stimulus to the Canadian economy which still requires further healing before the labor market can be expected to sustainably support 2% inflation.”