HYDRO-QUÉBEC SEES 2021 PROFIT REBOUND.

COMES IN AT 1%

OTTAWA • Canada’s annual inflation rate accelerated more than expected in January, data from Statistics Canada showed on Wednesday, and could continue to rise in coming months compared with the low levels reached a year ago during the first COVID-19 lockdowns.

Canada's inflation rate accelerated to 1.0 per cent in January on higher durable good and gasoline prices, up from a year-on-year increase of 0.7 per cent in December, and beating analyst expectations of 0.9 per cent.

Before easing again, the annual rate could test three per cent in April or May due to a combination of higher commodity prices and the statistical comparison to the period of last year's shutdowns, analysts said.

“In the next few months, with the run-up in oil prices in particular ... and when we compare ourselves to what

WE ARE GOING TO GET SOME VERY BIG INFLATION NUMBERS.

happened a year ago, we are going to get some very big inflation numbers,” said Doug Porter, chief economist at BMO Capital Markets.

“So I think this is just an opening salvo in terms of what we are about to see for headline inflation.”

But even if inflation were to temporarily top three per cent, the upper threshold of the Bank of Canada's control range for its two-per-cent target, the Bank would be unlikely to change its policy stance, said analysts.

“The central bank will look through that increase and focus on all the ways COVID-19 is still battering the Canadian economy,” said Royce Mendes at CIBC, pointing to hard-hit services like airline fares.

The Bank of Canada has said it will keep its key overnight rate at a record low 0.25 per cent into 2023.

Two of the three core measures of inflation moved in January, with all remaining below target. The common measure, which the Bank says is the best gauge, was steady at 1.3 per cent.