Canada’s annual inflation rate rose to 6.7% in March, its highest level since January 1991.
Canadian consumer prices in March were up from 5.7% in February and exceeded the median
expectation of 6.1% among economists.
With inflation running at a three-decade high, it reinforces expectations that the Bank of Canada
will continue to aggressively raise interest rates to bring consumer price increases back down to
the 2% to 3% range targeted by the central bank.
The latest inflation report from Statistics Canada showed that prices rose by 1.4% in March
alone, the biggest one-month increase since the country introduced a federal sales tax in 1991.
While gasoline prices were the biggest contributor to the monthly and annual gain in consumer
prices, inflation has become broad-based with sharp increases in costs for housing, food and
cars. The average of the central bank’s core measures, which remove volatile food and energy
prices, rose to 3.77%, also the highest level since 1991.
On a seasonally adjusted basis, prices jumped 0.9% in March, matching a record high. Gasoline
prices were up 12% on the month, and 40% from a year earlier. Food prices rose 7.7% from a
year earlier, after a 0.9% gain in March. Grocery prices were up 8.7% on an annual basis.
Bonds were hit hard by the latest inflation numbers. The benchmark Canadian government two-
year yield rose to nearly 2.56%, the highest level since October 2008 and up from about 2.52%
before the consumer price numbers were released. The 10-year yield moved above 2.8% on the
news.