Despite a notable increase in the annual pace of inflation in March, mortgage costs have actually declined over the past year, according to Statistics Canada.
The average of Canada’s three measures for core inflation stood at 1.93% as of March, its highest level since January of last year.
The consumer price index last month saw a 2.2% year over year increase, doubling the 1.1% annual acceleration in February. During the same timeframe, mortgage interest costs dropped by 6.3%, with most of the impetus stemming from the Bank of Canada’s prolonged freeze of its overnight rate.
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However, “for many Canadians, inflation doesn’t feel quite as weak as the news would suggest,” said James Marple, senior economist and managing director at TD. “Canadians have shifted consumption toward shelter, which has been increasing in price, and away from clothing and recreation, which has fallen.”
A crucial metric to look out for would be homeowner replacement costs, which had a 7.9% annual gain in March, its largest 12-month increase since December 2006.
Read more: Canada’s 12-month inflation rate falls to lowest level since Great Financial Crisis
Royce Mendes, senior economist at Canadian Imperial Bank of Commerce, said that steady price acceleration will make itself felt in this month’s inflation reading.
“Given the fact that the surge in headline inflation is simply due to base effects, the Bank of Canada will look through the recent acceleration and continue to focus on the support still needed for the labour market,” Mendes said, as reported by BNN Bloomberg.