Canada’s inflation rate rose slightly to 4.4 percent in April in an unexpected reversal of a downward trend over the previous 10 months, the national statistical agency said Tuesday.
The Consumer Price Index was up 0.1 percentage points from the previous month’s rate, after having posted a steady decline since a June 2022 peak of 8.1 percent.
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“The slow down in Canadian inflation is looking like it might have been a false dawn,” Desjardins analyst Royce Mendes said in a research note, adding that the April figure “was well above consensus expectations.”
Canadians should expect the central bank as a result to “remain hawkish and focused on bringing inflation to heel, leaving the door open to further rate increases,” he said.
“That said, data can be volatile, and today’s print won’t seal the deal on further tightening.”
RBC Economics Claire Fan, however, suggested underlying price pressures would continue to ease and that the Bank of Canada is likely “to stay on the sideline for the remainder of the year.”
According to Statistics Canada, higher year-over-year rent and mortgage costs contributed the most to the increase in average consumer costs.
Mortgages were recently initiated or renewed at higher interest rates, which has also stimulated higher rental demand, the agency explained.
Prices for groceries rose at a slower rate in April with the slowdown stemming from smaller price increases for fresh vegetables and coffee and tea.
Moderating that deceleration were increased prices for fresh fruit, notably oranges.
Prices for passenger cars and trucks were also up in the month.
But the costs of gasoline and other fuels, childcare, and computer equipment fell.
At its last two meetings, the Bank of Canada kept its key lending rate unchanged at 4.5 percent. Earlier this year it became the first major central bank to pause its aggressive monetary policy after eight consecutive rate hikes.