On Tuesday, it was revealed by Statistics Canada that the country’s annual inflation rate rose to 4.4% last month. Many economists and experts were expecting Canada’s inflation rate to be closer to 4.1%.
In March, the inflation rate was 4.3% and this latest news marks the “first acceleration in headline consumer inflation since June 2022”.
The price of groceries, rent and mortgages, and gas all increased in April.
While gas prices increased from March 2023 to April 2023 (+6.3%), gas prices were 7.7% lower in April 2023 compared with April 2022, when prices were higher due in part to Russia’s invasion of Ukraine.
Grocery prices continue to rise, but at a slower rate. Year over year, prices for groceries rose at a slower rate in April (+9.1%) than in March (+9.7%), with the slowdown stemming from “smaller price increases for fresh vegetables and coffee and tea”.
Price increases for fresh vegetables slowed year over year in April (+8.8%) compared with March (+10.8%), mainly driven by lower prices for lettuce (-3.3%), which have fallen from record price levels in December 2022.
The Consumer Price Index (#CPI) rose 4.4% year over year in April 2023, following a 4.3% increase in March. To learn more: https://t.co/pXYzXUC8C0. pic.twitter.com/ZNaxr9tmM2
— Statistics Canada (@StatCan_eng) May 16, 2023
The other area of the economy that is driving up inflation is mortgage interest costs. Shelter costs rose 4.9% on a year-over-year basis in April, after a 5.4% increase in March. Canadians paid 28.5% more in mortgage interest costs last month compared to April 2022.
“The year-over-year increase in the homeowners’ replacement cost index slowed for the 12th consecutive month in April (+0.2%) compared with March (+1.7%), reflecting a general cooling of the housing market,” says Statistics Canada.
With April’s inflation figures now out, the Bank of Canada may contemplate further rate hikes in the future. The next scheduled date for announcing the overnight rate target is June 7, 2023