Pump prices, airline tickets help propel Canada’s annual inflation rate to 2.3%

OTTAWA – Canada's annual inflation rate continued creeping higher last month to hit 2.3 per cent.

The March figure from Statistics Canada shows the pace of inflation inched a little farther past the midpoint of the central bank's ideal range of between one and three per cent.

By comparison, inflation was 2.2 per cent in February and 1.7 per cent in January.

The annual pace of inflation was the highest since it hit 2.4 per cent in October 2014, just as the oil-price slump was getting underway.

The upward forces on inflation last month were led by higher costs for gasoline and air transportation, while cheaper prices for video equipment, digital devices and electricity applied downward pressure.

The report also says the average of the Bank of Canada's three measures of core inflation, which are designed to leave out the noise of more-volatile items, was two per cent last month.

The Bank of Canada scrutinizes inflation when it considers interest-rate decisions. Its rate hikes can be used as a tool to help prevent inflation from climbing too high.

But the recent readings above two per cent are unlikely to have a major impact on upcoming interest-rate decisions — because the central bank is now expecting them.

Earlier this week, the central bank said that due to the temporary effects of higher gas prices and minimum wage increases it has raised its inflation projections. The bank is now expecting the measure to average 2.3 per cent in 2018 before settling back down to 2.1 per cent in 2019.