Canadian inflation accelerated in April as consumer prices rose 2 per cent in the twelve months to April, a 0.5 point increase from March's inflation reading of 1.5 per cent and nearly a full percentage point higher than February. The increase was largely explained by rising energy prices, including a 6.6 per cent gain in gasoline prices and a 26 per cent gain in the price of natural gas. The Bank of Canada's index of core inflation, which strips out the most volatile components of the CPI, such as food and energy prices, increased 1.4 per cent in April, a modest increase from 1.3 per cent in March. As noted in the Bank of Canada's most recent forecast, higher energy prices are expected to push headline CPI inflation higher in coming months. Therefore, the current pick-up in inflation is unlikely to sway the Bank toward a more hawkish stance as long as core inflation remains muted.
The impact of the elimination of the HST is finally starting to fade from inflation measured in BC. Consumer prices in the provinces rose 1.5 per cent in the 12 months to April. That increase follows several months of inflation reading at close to, or even below, zero.