{"id":19689,"date":"2022-03-16T13:20:09","date_gmt":"2022-03-16T13:20:09","guid":{"rendered":"https:\/\/www.pantheregroup.com\/2022\/03\/16\/canada-cpi-climbs-to-three-decade-high-at-5-7\/"},"modified":"2022-03-16T13:20:09","modified_gmt":"2022-03-16T13:20:09","slug":"canada-cpi-climbs-to-three-decade-high-at-5-7","status":"publish","type":"post","link":"https:\/\/www.pantheregroup.com\/2022\/03\/16\/canada-cpi-climbs-to-three-decade-high-at-5-7\/","title":{"rendered":"Canada CPI climbs to three-decade high at 5.7%"},"content":{"rendered":"<div style=\"text-align:center\"><\/div><p> \n<\/p>\n<div id=\"\">\n<header aria-label=\"Beginning of Article\" class=\"article-header\">\n<nav aria-label=\"Breadcrumb\" class=\"breadcrumbs\">\n<h2 class=\"visually-hidden\">Breadcrumb Trail Links<\/h2>\n<ol class=\"breadcrumbs__items list-unstyled\">\n<li class=\"breadcrumbs__item\"> News <\/li>\n<li class=\"breadcrumbs__item\"> FP Economy <\/li>\n<\/ol>\n<\/nav>\n<p class=\"article-subtitle\"> Kevin Carmichael: This latest acceleration will stoke speculation that the Bank will play catchup and raise its rate by half a point in April <\/p>\n<figure class=\"featured-image\"><picture class=\"featured-image__ratio\"><\/picture><figcaption class=\"featured-image__caption image-caption\"><span class=\"caption\">Statistics Canada says the annual inflation rate climbed to 5.7 per cent in February, its highest level since August 1991.<\/span> <span class=\"credit\">Photo by DARREN MAKOWICHUK\/POSTMEDIA<\/span> <\/figcaption><\/figure>\n<\/header>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Inflation in February accelerated from a rate that was already way too fast, adding to the pressure on Bank of Canada Governor Tiff Macklem to take a steeper path to higher interest rates.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment6199865462298232633055197117040359\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment6199865462298232633055197117040359\">Advertisement 2<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-2\">\n<div class=\"ad__inner__container\" data-ad=\"[[6,6],[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-interscroller=\"6x6\" data-ad-loc=\"2\" data-ad-mobile=\"[[6,6],[320,50],[300,50],[300,250],[300,600]]\" id=\"ad-2\" style=\"--desktopHeight:250px;--mobileHeight:600px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Statistics Canada\u2019s consumer price index increased 5.7 per cent from February 2021, the most since August 1991, the agency said on March 16. The January increase was 5.1 per cent.<\/p>\n<p>The central bank appears to have misjudged the upward pressure on prices, as it predicted in January that the consumer price index would average year-over-year increases of 5.1 per cent in the first quarter. The average over the first two months is 5.4 per cent, an alarming number for a country that had grown used to inflation being a non-story.<\/p>\n<p>Most of the heat in February was coming from familiar places. Gasoline and food prices surged again, while Statistics Canada\u2019s measure of shelter costs rose at its fastest year-over-year pace since August 1983.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment1978223329769368910919994857720790\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment1978223329769368910919994857720790\">Advertisement 3<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-3\">\n<div class=\"ad__inner__container\" data-ad=\"[[7,7],[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-interscroller=\"7x7\" data-ad-loc=\"3\" data-ad-mobile=\"[[7,7],[300,250],[320,50],[300,50]]\" id=\"ad-3\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>There was more evidence that inflation was spreading, as Statistics Canada\u2019s measure of inflation, excluding gasoline, increased 4.7 per cent from February 2021, the most since the agency created the gauge in 1999. The previous record was set a month earlier, when the index increased 4.3 per cent.<\/p>\n<p>The Bank of Canada aims to keep the index advancing at an annual rate of about two per cent, the midpoint of a comfort zone of one per cent to three per cent. Inflation, as measured by the CPI, which bundles hundreds of goods and services to come up with a broad cost of day-to-day living, has been outside the high end of the Bank of Canada\u2019s range since April, an unusually long stretch of time to be so far off target.<\/p>\n<p>Policy-makers at the central bank think most of the inflation is the result of factors over which they have little control. The global economy recovered from the initial shock of the pandemic faster than most expected, causing a mismatch between supply and demand. Drought and other extreme weather in major agricultural regions led to poor yields, driving up the cost of food. Now, war in Europe is stoking oil and other commodity prices anew.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment3422290658374846086770081048473088\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment3422290658374846086770081048473088\">Advertisement 4<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-4\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"4\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" id=\"ad-4\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>Higher interest rates won\u2019t do anything about those things. But they should cool demand, which, if not the major driver of inflation, is nonetheless strong. Employment fully recovered from the recession in the autumn, and the jobless rate fell to 5.5 per cent last month, one of the lowest rates on record. Gross domestic product returned to the level that the Bank of Canada estimates is consistent with non-inflationary growth at the end of 2021, implying that stimulus is no longer needed.<\/p>\n<p>\u201cThe economy is now in a place where moving to a more normal setting for interest rates is appropriate,\u201d Mackelm said in a speech on March 3, a day after he and his deputies lifted the benchmark interest rate a quarter point to 0.5 per cent, the first increase in more than three years.<\/p>\n<\/section>\n<div class=\"ad__section-border article-content__ad-group\">\n<section aria-describedby=\"advertisment5115415715049914115479076512785628\" class=\"ad\">\n<h2 class=\"visually-hidden\" id=\"advertisment5115415715049914115479076512785628\">Advertisement 5<\/h2>\n<div class=\"ad__container\">\n<div class=\"ad__inner\" id=\"ad__inner-5\">\n<div class=\"ad__inner__container\" data-ad=\"[[1200,250],[1200,90],[970,90],[970,250],[728,90],[300,250]]\" data-ad-loc=\"5\" data-ad-mobile=\"[[320,50],[300,50],[300,250]]\" id=\"ad-5\" style=\"--desktopHeight:250px;--mobileHeight:250px\">\n<div aria-hidden=\"true\" class=\"ad__placeholder\">\n<p> This advertisement has not loaded yet, but your article continues below. <\/p>\n<\/p><\/div><\/div><\/div><\/div>\n<\/section>\n<\/div>\n<section class=\"article-content__content-group\">\n<h2 class=\"visually-hidden\">Article content<\/h2>\n<p>A benchmark interest rate of 0.5 per cent is still extraordinarily low. Some on Bay Street, including Jean-Fran\u00e7ois Perrault, the former Finance official who now leads Bank of Nova Scotia\u2019s economics department, think the central bank has fallen behind the curve and is in danger of losing its grip on inflation.<\/p>\n<p>The latest acceleration in inflation will stoke speculation that the Bank of Canada will play catchup when it next meets to consider policy in April, and raise the benchmark rate a half point, instead of the typical quarter-point move.<\/p>\n<p>\u201cPrice growth has now exceeded the Bank of Canada\u2019s target range for eleven consecutive months, and the central bank is widely expected to hike rates again on April 13, with another five increases to follow over the course of the year,\u201d Karl Schamotta, chief market strategist at Cambridge Mercantile Corp., said in a note to clients.<\/p>\n<p data-async=\"\"><em>\u2022 Email: kcarmichael@postmedia.com | Twitter: <a class=\"twitter-follow-button\" data-evt=\"click\" 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