Canada’s Inflation Rate Sits At 30-Year High Of 6.8%

Canada’s annual inflation rate rose to 6.8% in April, the highest level in 30 years.

Consumer prices ticked up from 6.7% in March, according to Statistics Canada. That’s the
highest level since January 1991 and exceeded the median forecast of 6.7% among
economists.

Core inflation, which excludes volatile food and energy prices, rose to 4.23% in April, the
highest rate since 1990.

The report shows inflation pressures continue to be stronger than policymakers had anticipated,
putting pressure on the Bank of Canada to quickly withdraw stimulus from an overheated
economy.

Markets have priced in a second half-percentage point increase at the central bank’s next
meeting on June 1, which would bring its trendsetting policy rate to 1.5%. That rate is expected
to reach 3% by the end of this year.

Food costs continue to rise quickly across Canada, gaining 8.8% on an annual basis in April as
the war in Ukraine drives up the price of critical items such as wheat and fertilizer. Prices for
food purchased from stores are up 9.7% from a year ago, the highest level since 1981.

The cost of living is currently increasing at more than twice the average wage gain in Canada,
adding pressure to the economy.

The market’s reaction to the latest inflation numbers was muted, with the benchmark two-year
bond yield briefly rising as high as 2.825% before falling back to 2.81%. The Canadian dollar
traded at $1.2820 per U.S. dollar, little changed from earlier in the week.