Canada’s core inflation rate rises to 2.4 per cent

Canada’s core inflation rate was the fastest in more than six years in March, led by rising costs for everything from a text message to fresh meat and a new car.

The core consumer price index, which excludes gasoline and seven other items with volatile prices, quickened to 2.4 per cent from 2.1per cent in February, the fastest since December 2008, Statistics Canada reported Friday from Ottawa.

The Bank of Canada policy-makers predicted on Wednesday inflation will return to target in the first quarter of 2016, about a year earlier than they forecast in January, citing a weaker currency that is making imports more expensive.

“Today’s data lends support to the Bank of Canada’s fresh bias, but there’s a lot of data still to be covered,” said Derek Holt, Scotiabank’s vice-president of economics.

Total inflation accelerated to 1.2 percent from 1 percent. Economists predicted core and total inflation would rise 2.1 per cent and 1 per cent, according to median forecasts in Bloomberg surveys.

The central bank kept its key lending rate at 0.75 per cent this week for a second meeting after a surprise January cut. The economy is gaining momentum after a plunge in oil prices caused first-quarter output to stall, the bank said.

Passenger vehicle prices swung to a 1.8 per cent rise in March from a year earlier after falling at a 1 percent pace in February. Meat costs rose 11.8 per cent and telephone services by 6.3 per cent, Statistics Canada said.

Canada’s currency appreciated after the inflation report, climbing as much as 0.8 per cent to $1.2088 per U.S. dollar. Yields on benchmark government two-year bonds rose 4 basis points to 0.62 per cent.