Canada’s inflation rate reversed its cooling trend last month and moved higher, to a 4.4 per cent annual rate.
Economists had been expecting new data released by Statistics Canada on Tuesday to show the cost of living had eased from March’s 4.3 per cent pace to something around 4.1.
Instead, it moved higher again, as the cost of things like gasoline, rent and mortgages increased during the month.
It’s the first acceleration in the cost of living since June of 2022, when Canada’s inflation rate hit a more than 40-year high of 8.1 per cent.
Food prices have been a major source of consternation for Canadian families of late, and while overall costs have come down from their recent record highs, they are still staying at eye-watering levels.
Grocery prices have increased by 9.1 per cent in the year up to April. That’s down from March’s 9.7 per cent pace but still more than twice as high as the overall inflation rate.
WATCH | Demand for food banks has never been higher:
The rising cost of living and inflation have pushed daily visits to Canada’s largest food bank up by 40 per cent since before the pandemic. Advocates are calling for an emergency top-up to social assistance programs and a way to index them in the future.
Gas prices going up again
Gasoline prices — which spiked in early 2022 after the Russian invasion of Ukraine — have eased from the highs seen a year ago, but are once again inching higher on a monthly basis.
Pump prices rose by 6.3 per cent in the month of April alone, the biggest jump seen since October of last year. While gasoline prices are going up for a variety of geopolitical and macroeconomic reasons, one factor in their monthly jump was that the federal carbon tax increased on April 1, to $65 per tonne of emissions.
That added about three cents per litre to the cost of gasoline, and brings the total tally to roughly 14 cents per litre.
According to government data, the average retail price for a litre of gasoline in April was just over $1.62. That’s up from $1.53 in March, but still down significantly from the all-time high of $2.08 reached in June of 2022, and $1.75 a litre this time last year.
The increase in the inflation rate will not come as welcome news to the Bank of Canada, which has been raising its interest rate aggressively in order to extinguish the flame of constantly higher prices.
The bank recently hit pause on its rate hikes because the numbers have shown a clear cooling in the inflation rate since last summer, but at least one economist says Tuesday’s data could cause the central bank to have to think about hiking some more.
“The risk of a return to rate hikes at the next … release can’t be ruled out, as staying on hold is now very dependent on seeing a slowdown in the labour market,” CIBC economist Avery Shenfeld said, noting that the numbers “will still be a bit of an eyebrow raiser for those counting on steady progress.”
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