Inflation continues to soar in Canada, with the Consumer Price Index (CPI) increasing 6.8 per cent on a year-over-year basis in April, according to Statistics Canada.
The increase was driven by rising food and shelter prices and was up slightly from March, when inflation hit a 31-year high with a 6.7 per cent increase from the year before. Economists had forecast that inflation would remain flat at 6.7 per cent.
All eight major components of the index saw increases in the month of April, with food and shelter prices accelerating at a faster rate than in March, up 8.8 per cent and 7.4 per cent respectively. The six remaining components either stayed the same or increased at a slower rate than last month.
Canadians paid 9.7 per cent more in April for groceries, the largest increase in that category since Sept. 1981. The price increases in food have been broad, Statistics Canada said Wednesday, “with consumers paying more for nearly everything at the grocery store.” The price of meat was up 10.1 per cent, fresh fruit up 10 per cent and fresh vegetables up 8.2 per cent. The price of pasta rose 19.6 per cent, cereal products climbed 13.9 per cent, bread gained 12.2 per cent and rice up 7.4 per cent. The cost of a cup of coffee was also higher, increasing 13.7 per cent annually.
“The recent period of higher food prices has occurred within the context of numerous events that are continuing to fuel higher prices,” Statistics Canada says, pointing to Russia’s invasion of Ukraine, which has put pressure on wheat products, as well as poor weather in growing regions and higher costs of production for farmers.
Shelter costs last month increased at the fastest pace since June 1983, with mortgage interest costs rising on a month-over-month basis for the first time since April 2020.
Gas prices also rose in April from last year, but were slightly lower (-0.7 per cent) than in March. Canadians paid 36.3 per cent more for gasoline in April than they did during the same time last year.
One of few categories that did see prices decrease is child care services, which fell 6 per cent in April compared to last year.
May inflation 'primed to pop'
BMO chief economist Douglas Porter wrote in a note following the release of CPI that April's uptick came despite a brief respite in gas prices, showing that "inflation is spreading much more broadly and at clear risk of getting firmly entrenched." Gas prices have since increased in the month of May, according to Natural Resources Canada, with the average price in Canada topping $2 a litre for the first time on Tuesday.
Porter wrote that he expects inflation to accelerate again in May, and that "at the very least, it looks like headline inflation is primed to pop above 7 per cent."
"This is the relative calm before another downpour in next month's report, as gasoline prices are tracking a double-digit increase for May alone," Porter said.
"Barring a deep dive in oil prices in coming weeks and months, we expect that the worst is yet to come on the headline readings, and that inflation north of 6 per cent will still be with us by the end of this year."
Inflation has been on a tear in Canada, putting pressure on the Bank of Canada to raise rates, cool demand, and bring inflation back to its target range of between one and three per cent. The central bank's next interest rate decision is on June 1.
With files from Reuters.
Alicja Siekierska is a senior reporter at Yahoo Finance Canada. Follow her on Twitter @alicjawithaj.