The country’s annual inflation rate accelerated to 2.1% last month to reach its highest mark in nearly a year and signal that the stronger economy has started pushing up consumer prices.
Statistics Canada said Thursday that its inflation reading for November came in hotter than the 1.4% number for October, boosted by higher costs for gasoline and air transportation, compared with a year earlier.
The result means the annual pace of inflation, which had slowed to a two-year low of 1% in June, has now climbed above the Bank of Canada’s ideal target of 2%. The central bank scrutinizes inflation data ahead of its interest-rate decisions — the next one is scheduled for Jan. 17.
Economists said the inflation reading reinforced their expectations that Bank of Canada governor Stephen Poloz will resume raising rates over the coming months.
Some also noted the robust economy showed further progress in a separate Statistics Canada report Thursday on retail trade. It said retail sales in October expanded by a healthy 1.5%, thanks in large part to a boost in new car sales.
“With economic momentum appearing to hold up into the fourth quarter … the case for the Bank of Canada to follow the Federal Reserve in hiking interest rates is building — don’t be surprised if it comes sooner rather than later,” TD senior economist James Marple wrote in a research note to clients.
“Inflation suddenly doesn’t feel so soft in Canada.”
Inflation had remained below 2% cent for almost all of 2017 and the rate hadn’t been as high as 2.1% since last January.
The report showed that pump prices delivered a major lift to last month’s overall inflation number after rising 19.6% compared with the year before.
But the data also contained signs the price pressure was a little more broad-based. Excluding gasoline, November’s inflation rate was 1.5%, an increase from 1.3% in October.
Two of the Bank of Canada’s three preferred measures of core inflation, designed to look through the noise of more-volatile items like gasoline, strengthened last month.
CPI-trim rose to 1.8% from 1.5% and CPI-median reached 1.9% compared to 1.7% in October, while CPI-common cooled to 1.5% from 1.6%.
By region, annual inflation was higher in every province last month with Manitoba, at 3.2%, and Saskatchewan, at 3.7%, seeing the biggest changes.
The retail sales numbers for October showed greater growth in every province, with higher numbers in Ontario, Quebec and B.C. accounting for the bulk of the increase, the agency said.
The report showed that retail e-commerce sales increased 19.4% in October, compared to a year earlier. However, it accounted for just 2.6% of overall retail sales.