Skip to main content

The Globe and Mail

Inflation jumps in February, but trend still tame

File photo of a man pumping gas in Toronto

MARK BLINCH/REUTERS

Inflation popped higher in February after months of muted price gains, driven by increased costs for gasoline, cars and groceries.

The country's consumer price index rose 1.2 per cent in February from a year earlier, quickening from a 0.5-per-cent increase in January, Statistics Canada said Wednesday. It also climbed 1.2 per cent from a month earlier, the fastest monthly pace of inflation since 1991.

Inflation had slowed in prior months, in line with other signs of slumping economic growth, prompting analysts and investors to pare back expectations for when the Bank of Canada will raise interest rates. Despite the one-month pickup, the broad picture of soft prices remains.

Story continues below advertisement

"This doesn't look to represent the start of a new trend of rising inflation, but does show that the very mild readings at the start of the year were an aberration," noted Douglas Porter, deputy chief economist at BMO Nesbitt Burns.

Transportation costs led the annual increase, advancing 2 per cent, spurred by higher costs at the pump, and as rebates disappeared at car dealerships. Food prices accelerated to 1.9 per cent after a 1.1-per-cent gain in January as consumers paid more for meat and fresh fruit. The cost of fuel oil also rose.

Despite the recent gain, consumer-price increases remain at the tepid end of the Bank of Canada's 1-to-3-per-cent inflation target, and that's not likely to change in the coming year.

"The sub-par growth recorded in the second half of 2012 introduced more slack into the economy, resulting in downward pressure..on prices," noted RBC economists. It's likely "that readings of sub-2 per cent will persist until the latter part of 2014."

The monthly gain in inflation is the largest since January, 1991, when the goods-and-services tax was implemented in Canada.

Among provinces, Newfoundland tallied the biggest increase in consumer prices, while the smallest gains were in Alberta and British Columbia.

Here are some other examples of what prices are up, and what's down from a year earlier:

Story continues below advertisement

  • Canned fish: 8.2 per cent
  • Breakfast cereal: 4.5 per cent
  • Apples: 7.7 per cent
  • Lettuce: 21.2 per cent
  • Water: 6.7 per cent
  • Financial services: 4.2 per cent
  • Gasoline: 3.9 per cent
  • Fats and oils: –2.6 per cent
  • Fresh or frozen fish: –4.6 per cent
  • Mortgage interest costs: –4.2 per cent
  • Appliances: –2.6 per cent
  • Children’s clothing: –6.5 per cent
Report an error Licensing Options
About the Author

Tavia Grant has worked at The Globe and Mail since early 2005, covering topics from employment and currency markets to trade, microfinance and Latin American economies. She previously worked for Bloomberg News in Toronto and Zurich, writing on mining, stocks, currencies and secret Swiss bank accounts. More

Comments

The Globe invites you to share your views. Please stay on topic and be respectful to everyone. For more information on our commenting policies and how our community-based moderation works, please read our Community Guidelines and our Terms and Conditions.

We’ve made some technical updates to our commenting software. If you are experiencing any issues posting comments, simply log out and log back in.

Discussion loading… ✨