Canadian Inflation Rate Increases Amid Rising Gas and Fuel Prices

Canadian inflation rates are slowly ticking towards their highest rates since the start of the pandemic on the back of steadily rising gas prices.

Annual inflation increased in Canada to 1.1 percent in February as prices have risen roughly five cents on a monthly basis. This is slightly behind economist projections, which called for an inflation increase of 1.3 percent and an average price hike of about seven cents.

Core inflation has remained unchanged at 1.7 percent. Core inflation values are often seen as the best measure for determining price increases.

Economists expect inflation to accelerate in the second half of 2021, expecting it to blow well past Bank of Canada’s 2 percent target. 

Toronto-Dominion Bank economist James Maple told investors that the Bank of Canada will “look past the near-term rise in inflation”, which he asserts is largely driven by increasing energy costs and comparisons between March 2020 and today.

Prices on gasoline have risen for their third straight month in a row, up 6.5 percent in the month of February. Price increases in gas have been the result of infrastructure damage in the American southwest after an ice storm shook the region. OPEC has also contributed to the rising gas prices, imposing production restrictions despite increasing global demand.

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