Canada Inflation Rate Ticks up in February on Gas PricesOTTAWA (Reuters) – Inflation in Canada edged higher in February on rising gasoline prices, though the slight acceleration was below analyst expectations, data showed on Wednesday.
By Julie Gordon
Canada’s annual inflation rate rose to 1.1%, from 1.0% in January, Statistics Canada said. Analysts polled by Reuters had expected the rate to gain to 1.3% in February.
All three core measures of inflation were steady in February. CPI common, which the Bank of Canada says is the best gauge of the economy’s underperformance, was flat at 1.3%.
“From the Bank of Canada’s perspective, all three of their preferred core measures are still at or below their target range,” said Nathan Janzen, a senior economist at RBC Economics. “So I don’t know that it changes a whole lot right now.”
While February’s gain was modest, inflation is expected to accelerate in the coming months, testing the 3% upper threshold of the Bank of Canada’s control range, then dropping back to around the 2% target as current months are compared to year-ago numbers, analysts say.
The Bank of Canada has signaled it does not plan to raise interest rates until into 2023, though it is set to review the forecasts that underpin its guidance in April. Economists expect the central bank to reduce its bond purchases as soon as next month.
“Generally speaking, you don’t have emergency levels of disinflationary pressures to justify emergency levels of stimulus, in my opinion,” said Derek Holt, vice president of Capital Markets Economics at Scotiabank.
Gas prices rose for the third consecutive month, Statscan said. Excluding gasoline, annual inflation rose 1.0% in February, down from 1.3% in January.
The Canadian dollar was trading 0.1% lower at 1.2464 to the greenback, or 80.23 U.S. cents, but holding near an earlier three-year high.
(Reporting by Julie Gordon in Ottawa; additional reporting by Steve Scherer in Ottawa, Fergal Smith and Jeff Lewis in Toronto and Allison Lampert in Montreal; editing by Louise Heavens, Nick Zieminski and Jonathan Oatis)