Canada’s annual inflation rate accelerated to two per cent last month. (THE CANADIAN PRESS/Jonathan Hayward)

Inflation rises as higher airfares, veggie prices offset cheaper gas

Statistics Canada says inflation accelerated to two per cent in December

Canada’s annual inflation rate saw an unexpected acceleration to two per cent last month as higher costs for airfares and fresh vegetables offset cheaper prices at the pump, Statistics Canada said Friday.

Year-over-year prices picked up their pace in December after inflation was just 1.7 per cent in November, the agency said in its latest consumer price index. A consensus of economists had expected inflation to register 1.7 per cent for December, according to Thomson Reuters Eikon.

READ MORE: B.C. rent increases capped to inflation, 2.5% for 2019

But even as overall inflation advanced at a faster clip last month, the average of three core inflation readings remained flat at 1.9 per cent, close to the Bank of Canada’s ideal two per cent target.

Experts believe Friday’s core figures mean there’s no inflation-fuelled urgency for the Bank of Canada to raise its trend-setting interest rate.

“They will see that there’s no acceleration in (core) inflation, so they can be patient in the coming months,” National Bank of Canada deputy chief economist Matthieu Arseneau said of the central bank governing council in an interview.

“For the Bank of Canada, the focus has changed a bit (to be) more on growth for the coming months, so I think that for now (the inflation) report is less important.”

Core inflation, which excludes more-volatile components like gasoline, is the Bank of Canada’s preferred measure. The central bank, which can raise its rate as a way to keep inflation from climbing too high, pays close attention to the core numbers ahead of its policy decisions.

“Despite the upside surprise to headline inflation, core measures continued their 2018 theme of slow and steady,” TD senior economist Brian DePratto wrote in a research note to clients Friday.

“These may be somewhat backwards-looking indicators, but the message remains clear: there are few signs of fundamental inflationary pressure at the moment.”

A closer look at the numbers showed that lower gas prices, down 8.6 per cent last month, kept headline inflation from being even higher. Excluding gasoline, inflation was 2.5 per cent in December.

Compared with a year earlier, Statistics Canada said Canadians paid 14.9 per cent more for fresh vegetables and 28.1 per cent more last month for air transportation — mostly due to higher travel prices during the holidays.

DePratto noted that observers should remain cautious about year-on-year airfare comparisons because Statistics Canada introduced a methodology change for the category in early 2018.

Inflation was also up last month due to a 7.5 per cent boost in mortgage interest costs, a 3.8 per cent increase in restaurant bills and 5.1 per cent rise in passenger vehicle insurance premiums.

Andy Blatchford, The Canadian Press

Like us on Facebook and follow us on Twitter

Just Posted

Ponoka County receives update from energy lobby group

CAPP hopes to work with municipalities on property tax issues

The Brick Learning Centre celebrates 2019 graduates

The “Good Old Days” continue on

Ponoka senior receives first place writing award for her memoirs

Anne Teeuswen, 88, recognized for “Spending Time With My Memories”

Traffic safety measures during the 2019 Ponoka Stampede

Reduced speed limits and temporary four-way stop start June 22

Video shows fireworks shot at swan in Alberta

Alberta Fish and Wildlife is investigating the incident in Grande Prairie

Air Canada reviewing how crew left sleeping passenger on parked plane

In a Facebook post, the woman said she woke up ‘all alone’ on a ‘cold dark’ aircraft

Canadians crash out of Women’s World Cup in 0-1 loss to Sweden

Canada missed a chance to tie the game on a penalty shot

Late night fight in Wetaskiwin results in aggravated assault, assault with a weapon charges

Wetaskiwin RCMP investigate armed robbery and aggravated assault

Maskwacis featured in documentary series that unearths Indigenous cuisine

Red Chef Revival’s host visits community, elders and Nipisihkopahk School

UPDATED: Manderville located, Edwards still missing

Last seen in Ponoka June 22, 2019

PHOTOS: Event marks one year since soccer team rescued from Thai cave

Nine players and coach took part in marathon and bike event to help improve conditions at cave

Fighter Jets light up Bucs’ to take AFL first place

38-3 loss puts Central Alberta into second place in the AFL

Most Read