A steep rise in the price of gasoline pushed Canada’s annual rate of inflation to 2.4% in April, up from 2.2% seen in March, Statistics Canada said today.

The core inflation rate – which excludes eight volatile components identified by the Bank of Canada – unexpectedly slipped to 1.6% in April from 1.7% in March.

Economists had forecast core rate to rise to 1.8%. Core inflation has been relatively stable since August 2005, StatsCan noted.

“The big news here is that Canada has just not shown the recent upswing in core inflation that the U.S. has over the past three months, likely reflecting the dampening impact of the strong loonie,” BMO Nesbitt Burns senior economist Doug Porter said in a written commentary.

On a month-to-month basis, consumer prices rose 0.5% in April, matching the rate seen in March.

The core inflation rate edged down 0.1% in April, after rising 0.4% the previous month.

The latest figures on price increases come less than a week before the Bank of Canada is due to make its next decision on interest rates.

Economists have been divided over the bank’s next move on May 24 – whether it will stand firm at the current 4% or raise it key lending rate to help contain rising prices.


In today’s report, StatsCan noted that between April 2005 and April 2006, gasoline prices surged 15.8%, twice the 12-month rate seen in March.

Much of the increase was due to a 13.5% jump in gasoline prices between March and April of this year, the strongest one-month change since May 2004.

In addition to rising costs at the gas pumps, higher automotive vehicle prices and homeowners’ replacement cost also contributed to the rise in the inflation rate.

Consumers paid less for computer equipment and supplies, video equipment and women’s and men’s clothing, due to technological advances and imports of cheaper goods, the government agency said.