Annual inflation rate swells to 2.2%

OTTAWA• The country’ s annual pace of inflation sped up to 2.2 per cent last month, its fastest pace in more than three years as the rate moved above the central bank’s ideal bull’s- eye of two per cent, Statistics Canada said Friday.

The agency’s February data represented a significant boost to the inflation rate compared with t he month before when it was 1.7 per cent.

The report also found the average of the agency’s three measures of core inflation, designed to omit the noise of more- volatile items like gasoline, continued its upward momentum last month and has now climbed slightly above two per cent for the first time since February 2012.

Inflation is a central piece of the information for the Bank of Canada’s interest- rate decisions and the stronger numbers translate into a hike sooner than experts have anticipated.

TD Bank senior economist James Marple said the recent “dovish tone” from the Bank of Canada on the interest rate will surely be challenged by the robust core inflation numbers.

“All told, today’s data does create the risk that the Bank of Canada moves sooner, but with downside risks to the economic outlook still elevated, this summer remains most likely to see the next policy interest rate hike,” Marple wrote.

Those risks include an uncertain global trade picture given U.S. President Donald Trump’s penchant for imposing tariffs and the ongoing NAFTA renegotiations.

Statistics Canada’s inflation report said the main driver that pushed up yearover-year consumer prices in February was the higher cost of gasoline, which rose 12.6 per cent, while pricier items like restaurant meals and passenger vehicle also had impacts.

The primary downward forces on prices came from cheaper video equipment, digital devices, hotels and electricity.

Year-over-year prices climbed in every province in February compared with the year before, with the strongest acceleration in Atlantic Canada.

The last time the overall inflation reading reached 2.2 per cent was October 2014, just as the oil- price crash was getting underway.