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Canada prices: Inflation at highest level since 1991

Canada prices: A worker fuels a vehicle at a gas station in Vancouver, British Columbia, Canada, on Feb. 16, 2022. Canada's inflation rate surpassed 5 percent for the first time since September 1991, rising 5.1 percent on a year-over-year basis and up from a 4.8 percent gain in December 2021, Statistics Canada said Wednesday. (Photo by Liang Sen/Xinhua via Getty Images)
Canada prices: Gas prices are up more than 32 per cent year over year (Getty Images)

Prices for consumer goods continue to rise in Canada. Statistics Canada says the Consumer Price Index (CPI) rose 5.7 per cent year over year in February, up from 5.1 per cent in January.

It was in line with expectations but was the largest gain since August 1991 (6 per cent) and the second straight month inflation topped 5 per cent.

Canadians felt pain at the pumps, paying 32.3 per cent more for gas compared to the same time last year. Gas prices were up 6.9 per cent month over month.

Putting food on the table got more expensive too. Food bought at stores rose 7.4 per cent year over year for the largest yearly jump since May 2009.

"Looking ahead, the spike higher in gasoline prices in early March, despite now partly fading, should see headline inflation accelerate again next month," said CIBC economist Andrew Grantham.

"Further out, the war in Ukraine will add to food price inflation, and sanctions on Russia combined with new lockdowns in China will lead to renewed supply chain issues, resulting in a slower easing of goods price inflation later this year than we were expecting a month ago."

Shelter costs rose 6.6 per cent year over year, the fastest pace since August 1983. Prices for household appliances rose 7.8 per cent.

Also See: The latest real estate news for housing prices, mortgage rates, markets, luxury properties and more at Yahoo Finance Canada.

Prices were up in all provinces across the country.

Interest rate hikes ahead

The Bank of Canada raised its benchmark interest rate for the first time since 2018, to fight inflation. It has signalled further hikes are coming and its next announcement is on April 13th.

BMO chief economist Doug Porter says the report makes the case for an even tighter stance by the Bank of Canada in the months ahead.

"If there is any good news here, it's that price increases outside of food and energy are relatively stable—they rose 0.3 per cent in seasonally adjusted terms in February," said Porter.

"The less-good news there is that the underlying trend in these core prices is still running at almost 4 per cent, well above the top end of the BoC's target, reinforcing the point that inflation is getting entrenched."

Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

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