Canadian inflation rose to 5.1 percent in January — far outpacing economists’ expectations — as price increases hit a 30-year high, the government statistical agency said Wednesday.
Rising fuel prices, along with food and shelter costs, were again major contributors to the monthly gain. The figure was up from 4.8 percent in December.
“Covid-19 pandemic-related challenges continue to weigh on supply chains,” adding to consumers’ fuel and grocery bills, Statistics Canada said in a statement.
The largest price increases at the checkout were for meat, margarine, condiments, spices and vinegars, fresh fruit and bakery products, as well as beer and wine, the agency said.
Drivers also paid more at the pump as “concerns over global oil supplies in response to international political events” drove up gasoline prices, it said.
The costs of mortgage interest, telephone services and travel tours, meanwhile, fell.
“With energy prices continuing to rise, inflation is set to accelerate even further and is unlikely to materially slow down before April,” Desjardins analyst Royce Mendes warned in a research note.
But, he added, it was “not enough to justify a 50bp (basis points) hike by the Bank of Canada in March, nor the seven rate hikes priced in to markets for this year.”
High household debt is likely to also temper a tightening of monetary policy by the central bank, which has signaled a looming interest rate increase.