Statistics Canada says the consumer price index in April was up 3.4 per cent compared to a year ago, when prices plunged due to the pandemic.
Year-over-year inflation rose at its fastest pace since May 2011, the agency said Wednesday.
Prices rose in every major component on a year-over-year basis — and slightly faster than economists predicted. Analysts polled by Reuters had expected the annual rate to rise to 3.2 per cent in April.
Gasoline prices in April were up 62.5 per cent on a year-over-year basis, the largest annual increase Statistics Canada has on record.
Removing gasoline prices, Statistics Canada says annual inflation for April would have clocked in at a 1.9 per cent.
Regionally, Statistics Canada says prices rose year-over-year in every province, but were generally higher in Atlantic Canada where furnace fuel oil, which has risen in price, is more often used.
Is inflation spike temporary?
Analysts differed on what this means for the Bank of Canada.
Ryan Brecht, a senior economist at Action Economics, said that given that the central bank views the inflation spike as temporary due to the low numbers a year ago, they are likely to take this report in stride.
But Derek Holt, vice-president of Capital Market Economics at Scotiabank, said the narrative that inflation is transitory as the economy recovers is “at risk.”
“If we can post numbers like this in lockdown with stay-at-home orders, just imagine what happens when the economy reopens,” he said. “This is an across-the-board surprise.”