Gas-fuelled inflation rate rises to 3.1 per cent
Fuelled by a 26.9 per cent one-year increase in prices Canadians paid at the gasoline pumps, the national annual inflation rate jumped to 3.1 per cent in June, up from the 2.2 per cent rate in May.
The jump in overall inflation was the biggest one-month increase since September 2005, Statistics Canada said Wednesday.
June's increase was larger than the 2.9 per cent jump that economists had been expecting.
If the cost of gasoline was factored out, the inflation rate would have been a tamer 1.8 per cent for June.
The one-year jump in gasoline prices was the largest since the 34.7 per cent gain reported in September 2005, when hurricanes Katrina and Rita disrupted the oil market.
June's inflation figure reflected recent increases in pump prices, but also that gasoline prices had been on the decline in June 2007, Statistics Canada said.
The Bank of Canada's core index, which excludes several of the more volatile price factors and is used by the central bank to monitor the inflation control target, rose 1.5 per cent in June 2008 from June 2007. That rate matched the annual increase seen in May.
Inflationary pressureThe Bank of Canada has been sounding warnings recently about energy-driven inflation pressures. The bank recently ended its latest series of interest rate cuts and has held rates steady for the past two decisions.
"Normally, a steady streak of higher inflation rates would be met with a resounding call that the Bank of Canada would raise interest rates," said Dawn Desjardins, Royal Bank's assistant chief economist.
"However, last week's monetary policy report update silenced calls that the bank would shift into rate-hike mode as the governor highlighted that the best predictor of the all-items inflation rate in the medium term is movement in the core, and today's report showed that the core rate stayed in the lower end of the range during the past year," said Desjardins.
James Marple, an economist with TD Bank, said the Bank of Canada is unlikely to boost borrowing rates in response to higher inflation, as a sputtering national economy will reduce overall demand and slow the rise in product prices.
"With energy prices likely to ease through the course of the year, the worst of the inflation pest may now be behind us," he noted in a commentary on Wednesday.
Not just gas pricesGasoline wasn't the only factor putting upward pressure on the inflation rate. Statistics Canada said mortgage interest cost, bakery products and air transportation also put strong upward pressure on the consumer price index in June.
Mortgage interest cost increased 9.0 per cent year-over-year, as new housing prices continued to exert more upward pressure on this index than mortgage interest rates.
Homeowner's replacement cost — the cost of maintaining a housing structure — rose 3.2 per cent in June, down from the 4.0 per cent rate of growth posted in May. The 12-month increase observed in June was the smallest gain since March 2001.
Canadians paid 3.0 per cent more on store-bought food compared with the same month of the previous year, a jump from the 1.9 per cent increase reported for May. Prices for bakery products rose 12.3 per cent year-over-year.
Air transportation costs were 14.3 per cent higher, which was the biggest increase since May 2002. The increase was driven by premiums that carriers brought in to cover higher jet fuel costs. Statistics Canada said higher prices were seen on most routes, with transatlantic flights posting the sharpest price increases.
0 comments:
Post a Comment