Canada’s inflation rate reached 5.7% in February, its highest level since 1991, as prices for gasoline rose 32.3%.
Annual inflation was up from 5.1% in January, Statistics Canada reported. February’s rate was the highest level since August 1991 and exceeds the median estimate of 5.5% that economists had expected.
The increase in Canadian consumer prices strengthens expectations that the Bank of Canada will continue raising interest rates in coming months to rein in price pressures.
The average of the central bank’s core measure of inflation, which excludes volatile food and energy prices, rose to 3.47%, also the highest level since 1991.
Price gains were broad-based in February, which marked the second straight month that headline inflation exceeded 5%. Canadian motorists paid 32.3% more for gasoline compared with a year earlier, while prices for groceries rose 7.4%, the largest yearly increase since 2009.
Shelter costs rose 6.6% from a year earlier, the fastest pace since August 1983. Higher costs for both owned and rented accommodation contributed to the increase, with a recovery in youth employment and the resumption of international migration to Canada supporting rental demand.
Inflation has now exceeded the central bank’s 1% to 3% control range for 11 straight months. Since Canada introduced inflation targeting in the early 1990s, the inflation rate has averaged about 1.8%.
Earlier this month, the Bank of Canada raised its benchmark overnight interest rate to 0.50% from the emergency low of 0.25% that was in place since March 2020 when the pandemic hit North America. Markets are pricing in seven increases in borrowing costs over the next 12 months.
