OTTAWA (Reuters) – Canada’s annual inflation rate surprisingly ticked up to 4.4% in April, as higher shelter costs contributed to the first acceleration in the consumer price index in 10 months, Statistics Canada data showed on Tuesday.
Analysts polled by Reuters had expected the annual inflation rate to edge down to 4.1% from 4.3% in March. Month-over-month, the consumer price index was up 0.7%, higher than the forecast 0.4% gain.
The prices for groceries, however, rose at a slower pace in April than in March, helped by smaller price increases for fresh vegetables and coffee and tea, Statscan said. Excluding food and energy, prices rose 4.4% compared with a rise of 4.5% in March.
The average of two of the Bank of Canada’s (BoC) core measures of underlying inflation, CPI-median and CPI-trim, came in at 4.2% compared with 4.5% in March.
The central bank has kept rates unchanged at its last two policy setting meetings as it assesses whether its eight-consecutive rate hikes have been sufficient to tame inflation.
BoC Governor Tiff Macklem has said that Canadian inflation risks getting stuck significantly above the Bank of Canada’s 2% target, and if that happens the central bank is ready to hike interest rates further.
Higher rent and mortgage interest costs contributed the most to the annual inflation rate in April, Statscan said. The higher interest rate environment may have contributed to rising rents in April by stimulating higher rental demand, the agency said.
The month-over-month inflation rate was driven by gasoline prices, which posted the largest monthly increase since October, following an announcement from OPEC+ to cut oil output, Statscan said.
The Canadian dollar was trading 0.3% higher at 1.3430 to the greenback, or 74.46 U.S. cents.
(An earlier version of this story was corrected to say 10 months, not 11 months, in paragraph 1)
(Reporting by Ismail Shakil in Ottawa; Additional reporting by Fergal Smith in Toronto and Dale Smith in Ottawa, Editing by Mark Heinrich and Ed Osmond)
