Each major component of prices rose year-on-year, and faster than economists expected. Analysts surveyed by Reuters had predicted that the annual interest rate in April would rise to 3.2%.

Gasoline prices in April rose by 62.5% year-on-year, the largest annual increase recorded by Statistics Canada.

Statistics Canada said that excluding gasoline prices, the annual inflation rate in April will reach 1.9%.

Statistics Canada said that from a regional perspective, prices in each province have increased year-on-year, but prices are generally higher in Canada on the Atlantic coast, where higher-priced furnace fuel oil is more commonly used.

Is the inflation spike temporary?

Statistics Canada stated that the impact on the price index, which measures changes in the prices of various goods and services, should be temporary.

Last week, Bank of Canada Governor Tiff Macklem (Tiff Macklem) warned that headline inflation data is about to fluctuate, adding that he believes that April’s high data does not require immediate action by the central bank.

He told reporters after giving a speech to Canadian Atlantic University students last week: “The other part is that a large part of our economy is still weak.”

“There are too many Canadians who are unemployed, which puts downward pressure on inflation. So, yes, we expect the inflation rate to rise to about three times. [per cent] Then reduce. “

Inflation rate is the biggest factor considered by the Bank of Canada when setting benchmark interest rates. The bank wants to see an inflation rate between 1% and 3%.

Generally, when the inflation rate is too low, the bank will lower the interest rate to stimulate the economy, and when the inflation rate is too high, the bank will raise the benchmark lending rate to cool down.

Different analysts

Analysts are divided on what the current inflation rate means for the Bank of Canada.

Ryan Brecht, a senior economist at Action Economics, said that given the low levels a year ago, and given that the central bank considers the inflation spike to be temporary, they are likely to take the report in large strides.

But Derek Holt, vice president of capital market economics at Scotiabank, said that as the economy recovers, inflation is temporary and this statement is “risky.”

He said: “If we can lock in such a number by keeping orders at home, imagine what will happen when the economy reopens.” “This is a total surprise.”