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

Lightning causes three wildfires east of Osoyoos

It is believed the fires started by a lightning storm

Vernon pipe band youth snare accolades

Two young members of Vernon-based pipe bands have danced and drummed their way to high achievements

Vernon-based pop star Andrew Allen is back with a new band

Singer-songwriter Andrew Allen is bringing his new band home for a concert this Friday

Coldstream quick to clean vandalized rainbow crosswalk

Crosswalk was defaced on the weekend

Kingfisher reels in kids for North Okanagan fishing event

Enderby centre hosts free, family fun event

When walls talk: Vernon murals see generation II

“This new movement, an app, will bring the strength of some of those same Vernon visionaries together again into a newdigital form”

Lightning causes three wildfires east of Osoyoos

It is believed the fires started by a lightning storm

Air ambulance called to second collision on Highway 1 west of Salmon Arm

Emergency crews respond to motor-vehicle collision near Second Nations Road intersection

Backhoe ‘burned to a crisp’ in South Okanagan

South Okanagan fire chief said the situation could have been a lot worse

Crash closes Highway 1 near Tappen

The collision happened about 3:30 p.m. by James Road

Heat Beat: New scopes for VJH

Vernon Jubilee Hospital receives eight new colonoscopes

VIDEO: Man found dead near B.C. teens’ truck could be linked to a double homicide

RCMP said they are looking for Kam McLeod, 19, and Bryer Schmegelsky, 18, of Port Alberni

Kelowna cab driver charged with sexual assault

RCMP received a report May 28 alleging a taxi passenger had been sexually assaulted by a cab driver

Latest plan is to fly trapped fish by helicopter over Big Bar slide

Multi-pronged plan set in motion to freesalmon blocked by landslide in the Fraser River

Most Read