Inflation up 1.9% in March on higher prices for fresh vegetables, mortgage costs

The annual pace of inflation accelerated to 1.9 per cent in March, driven by steeper prices for fresh vegetables, among other things. Getty Images

Canada’s annual inflation rose last month as price pressures strengthened for fresh vegetables, mortgage interest costs and auto insurance.

Statistics Canada’s consumer price index in March increased 1.9 per cent compared with a year ago, up from its reading of 1.5 per cent for February and 1.4 per cent in January. The result was in line with the expectations of economists, according to Thomson Reuters Eikon.

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Compared with a year earlier, Canadians paid 15.7 per cent more in March for fresh vegetables, 8.1 per cent more on mortgage borrowing costs and 5.6 per cent more for car insurance. Year-over-year gasoline prices fell 4.4 per cent last month, internet costs dropped 9.2 per cent and travel tours moved down 6.4 per cent.

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The average of core inflation readings, which omit more-volatile items like gasoline and are considered better measures of price pressures, rose two per cent in March — up from 1.9 per cent in February. The firmer inflation picture brings the headline number closer to the central bank’s ideal two per cent target, and comes as the economy works through a soft patch brought on by the drop in crude-oil prices late last year.

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Bank of Canada governor Stephen Poloz has predicted the weakness to be temporary and for the economy to strengthen in the second half of 2019. The central bank, which has hiked its interest rate five times since mid-2017, will make a policy announcement next Wednesday. It’s widely expected to leave the benchmark unchanged.

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