Rising energy costs—and especially higher prices at the gas pump—are putting the most pressure on the inflation rate
By Katrina Caruso
When the inflation rate in Canada rose to 2.2% in February, Statistics Canada reported that it was the fastest year-over-year increase since October 2014. Economists had expected a 1.9% increase. Well, in March, prices rose an average of 2.3%, with the prices of air transport and gasoline increasing the most drastically, according to StatCan.
The price of gas has increased 17.1% from last year, and the energy industry as a whole is up by an average of 7.7%. Gas prices rose the fastest in Alberta. Higher prices for cars and mortgage interest also put pressure on the inflation rate.
Rises in inflation can mean higher interest rates, which are set by the Bank of Canada: higher interest rates can help keep inflation under control. The central bank has already raised the cost of borrowing three times since last July, but analysts say that the Bank of Canada is comfortable with an inflation rate of 2% and, in fact, expects an annual average inflation rate of 2.3% in 2018.
Core prices, a category that excludes “volatile” industries such as energy, rose 2% in March.
Ontario saw the biggest rise, which can be attributed in part to the increase in the minimum wage in January; prices in the province’s restaurant industry rose 6.6%, while the rest of the country saw an average 4% increase in restaurant prices.
Not everything has gone up, though. Prices fell in digital devices, electricity, video equipment, as well as in clothing and footwear, which showed the greatest decline.