OTTAWA – The country’s annual inflation rate decelerated under the weight of low energy prices to just 0.8 per cent last month – its smallest increase since October 2013, Statistics Canada said Friday.
The agency’s April inflation reading, which was released less than a week before the Bank of Canada’s next scheduled interest-rate announcement, was much lower than the 1.2 per cent increase in March.
Statistics Canada’s latest consumer price index found that cheaper year-over-year energy prices were among the biggest factors behind the weaker inflation rate – as prices rose in seven of the index’s eight major categories.
Gasoline prices fell 21 per cent in April compared with the previous year, while fuel oil tumbled 20 per cent and natural gas dropped by 14.6 per cent, the report said. The agency found that prices in all other major categories rose to the point that excluding energy items would bring the inflation rate up to 2.2 per cent
The items with the most upward pressure on prices included meat, which rose 11.2 per cent compared to a year earlier. Home and mortgage insurance rose 8.6 per cent and telephone services crept up 6.3 per cent.
Consumer prices rose last month in seven provinces – with Newfoundland and Labrador, Prince Edward Island and New Brunswick registering negative inflation. Saskatchewan had the highest inflation at 1.2 per cent.
The core inflation rate, which is monitored closely by the Bank of Canada and excludes some volatile items such as gasoline, was 2.3 per cent last month. It followed a reading of 2.4 per cent in March.
In February, the central bank warned the turbulence of the global oil-price crash could briefly bump inflation into negative territory, but it also said at the time that there was no reason to worry about outright deflation.
Even with the weaker inflation rate for April, Bank of Canada governor Stephen Poloz is widely expected to stand pat on the key overnight interest rate at next Wednesday’s policy meeting.
Last month, the bank said its outlook for inflation, the key indicator behind rate decisions, remained “roughly balanced.”
On a seasonally-adjusted monthly basis, inflation dropped 0.1 per cent in April, which followed an increase of 0.3 per cent in March.
Statistics Canada also released March data total retail sales, which it estimates were $42.47 billion, an increase of 0.7 per cent compared to the previous month.