Inflation gained 2% year-over-year in April following a 1.9% increase in March, with the cost of food and shelter showing the largest gains.
Statistics Canada reported Wednesday that seven of the eight components of the Consumer Price Index were higher last month with shelter costs up 2.7% year-over-year and contributing the most to the gains.
Growth in food and shelter costs reflected higher prices for fresh vegetables (up 14.5%) and mortgage interest costs (up 8.2%).
“Total inflation hit 2.0% in April while core inflation growth decelerated to 1.9% pace, reflecting weaker economic growth,” commented Conference Board of Canada principal economist Alicia Macdonald. “Excess supply is expected to linger in the economy through 2020 keeping inflation in check. As a result, the Bank of Canada will be in no rush to lift interest rates.”
The Conference Board of Canada’s latest forecast suggests that as the economy will be slow to absorb its current excess capacity, inflation pressures will remain muted. As such, the Bank of Canada is expected to remain on hold into 2020 as it evaluates how quickly the economy will emerge from its current soft patch.