Ottawa, May 19 – Canada’s consumer prices rose 6.8 per cent year-over-year in April, a slight increase from 6.7 per cent in March, Statistics Canada said.
The year-over-year increase in April was largely driven by food and shelter prices. Gas prices increased at a slower pace in April compared with March, moderating the acceleration of the all-items Consumer Price Index (CPI) in April, the national statistical office added on Wednesday.
Excluding gasoline, the CPI rose 5.8 per cent year-over-year in April, after a 5.5 per cent gain in March. This was the fastest pace since the introduction of the all-items, excluding gasoline special aggregate in 1999, according to the agency.
With the unemployment rate falling to a record low in April, strong employment figures tend to put upward pressure on prices. In April, average hourly wages for employees rose 3.3 per cent on a year-over-year basis, meaning that, on average, prices rose faster than wages, and Canadians experienced a decline in purchasing power, revealed Statistics Canada.
On a monthly basis, the CPI rose 0.6 per cent in April after a 1.4 per cent gain in March. On a seasonally adjusted monthly basis, the CPI rose 0.7 per cent.
“There’s no respite yet for Canadian consumers when it comes to inflationary pressures,” Canadian Imperial Bank of Commerce Economist, Andrew Grantham said in a market report.
He added that the fact that inflation is pushing further above the central bank’s forecasts virtually guarantees another 50 basis point hike at its next meeting in June and that it could well follow that up with another outsized move to get the overnight rate to the bottom end of its neutral range, or two to three per cent.
However, after that, signs of a slowing in the domestic economy and home-grown inflationary pressures should slow down the pace of rate hikes, Grantham said.