Canada's annual inflation rate hits 4.7% in Oct, highest since Feb 2003

TORONTO (Reuters) - Canada's annual inflation rate accelerated to 4.7% in October, the highest since February 2003, and up from a year-over-year increase of 4.4% in September, Statistics Canada said on Wednesday.

Analysts polled by Reuters had expected the annual rate to rise to 4.7% in October.

COMMENTARY

ANDREW KELVIN, CHIEF CANADA STRATEGIST, TD SECURITIES

"It's nice not to be looking at a significant upside surprise for once. It was largely as expected... But 4.7% year-on-year inflation is still quite strong inflation. The ex-energy measure is still up above 3% yoy."

"We don't have the data to support or disprove the idea that it's transitory or not transitory. That's the really important question here... You just need time, you just need to see several more months of data."

"This doesn't change anything for the Bank of Canada. This is in line with their forecast. Given their growth forecast has been too optimistic - growth data has been coming in below their forecast - you could say that they are actually falling short of where they expected to be in October in terms of momentum in the economy."

ROYCE MENDES, SENIOR ECONOMIST, CIBC CAPITAL MARKETS

"While the central bank still suggests that there is considerable slack in the economy, consistent with low measure of underlying inflation, policymakers are clearly becoming more uncomfortable with the headline inflation readings. That being said, the latest Monetary Policy Report projected an average inflation rate of 4.8% in Q4, suggesting that today's reading won't do much to alter central bankers' thinking on the timing of rate hikes."

DEREK HOLT, VICE PRESIDENT OF CAPITAL MARKETS ECONOMICS, SCOTIABANK

"To me the stand out is that the seasonally adjusted prices were up half a percent. So at the margin we are not cooling down. We are still getting some very hot readings on a month-over-month seasonally adjusted basis."

"There is more heat ahead, particularly with the Vancouver port disruptions. And I think we are going to get inflation crossing well above 5% by the end of the year."

(Reporting by Fergal Smith and Nichola Saminather; Editing by Denny Thomas)