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.

Just Posted

BC Ferries confirms Northern Sea Wolf ready for summer season

The plan is to have the Northern Sea Wolf assume the mid-coast service as of May 18

Historic building in Alexis Creek destroyed by fire overnight

“If it hadn’t been a heavy rain last night we could have lost many houses in the area”

Gas prices spike in northern B.C. ahead of the long weekend

Fuel went up 17 cents overnight in Prince Rupert

OP-ED: Striking a balance with the oil tanker moratorium

Dennis Patterson, Senator for Nunavut, on protecting Canada’s environment and economy with Bill C-48

What’s age got to do with it? B.C. couple with 45-year gap talks happy marriage

An Armstrong couple that has 45-year age gap began turning heads after being featured on show Extreme Love.

B.C. men challenge constitutionality of Canada’s secret no-fly list

Parvkar Singh Dulai says he received a “denial of boarding” notification under the no-fly program last May 17

Murder on B.C. property didn’t need to be disclosed before sale, court rules

Buyer had tried to break contract after learning a man with ties to crime had been murdered there

B.C.’s largest Vaisakhi festival target of threatening Facebook post: Surrey RCMP

Police say they are investigating the posts on Facebook, after local MLA forwarded screenshots

Pug life: B.C. town boasts waggish list of dog names

Freedom-of-information request lists most ‘pupular’ dog names registered in White Rock

VIDEO: Fish farming company launches $30-million vessel to treat salmon for sea lice in B.C. waters

Freshwater treatment an improvement but fish farms should be removed from sea, says conservationist

Singh says childhood abuse steeled him for scrutiny and stress of politics

He recounts the assaults for the first time in his book Love & Courage

Despite five extra weeks’ parental leave in Canada, dads still face stigma: survey

One reason people said dads don’t need leave is because they can just bond with their kids at weekend

Vintage bottles, magic cards, a 1969 Playboy: Quirky items found in historic B.C. buildings

Crews set aside some of the funkier pieces emerging from the construction rubble

Most Read