Canada inflation spikes to 3.3 %

OTTAWA, (AFP) -Canadian consumer prices rose 3.3 percent in the 12 months to March, the largest increase since September 2008, a government agency said Tuesday.

Gasoline prices increased 18.9 percent in March, Statistics Canada said. Prices for fuel oil and other fuels increased 31.3 percent, while electricity prices rose 4.3 percent.

Food prices rose 3.7 percent in the month, the largest year-over-year advance since August 2009.

Other items that contributed significantly to the pickup in prices were travel services, clothing, and the purchase of passenger vehicles.

On a seasonally adjusted monthly basis, consumer prices rose 0.8 percent from February to March, the largest increase since October 2010.

Analysts had expected inflation to rise to 2.8 percent year over year, following a 2.2 increase in the 12 months to February.

Most agree the spike in March is likely to put pressure on the Bank of Canada to halt its incremental increases in its key lending rate.

Canada was the first G7 nation last year to hike interest rates from a historic low, raising rates three times since mid-2009, before putting on the brakes as the Canadian economy surged in the last quarter of 2010.

The central bank maintained the rate at one percent at its last meeting on April 12, for the fifth time since October, citing the strength of the Canadian dollar.

On a year-over-year basis, prices increased in all major components of Statistics Canada’s consumer price index in March.

Except for alcoholic beverages and tobacco products, March prices rose at a faster rate than in February.

Consumers paid more for passenger vehicles and passenger vehicle insurance premiums, airline tickets, beef, pork, bakery and cereal products, dairy products, electricity, household furnishings and child care.

Prices for fresh vegetables increased as bad weather in Mexico and the southern United States reduced supply.

Hotel rooms, non-prescribed medicines, clothing and footwear also cost more. “This year in March, fewer clothing items were on discount compared to the same month last year,” said Statistics Canada.