The year-over-year increase in April was largely driven by food and shelter prices. Gas prices increased at a slower pace in April compared with March, moderating the acceleration of the all-items Consumer Price Index (CPI) in April, the national statistical office said.
Excluding gasoline, the CPI rose 5.8 percent year over year in April, after a 5.5 percent gain in March. This was the fastest pace since the introduction of the all-items excluding gasoline special aggregate in 1999, according to the agency.
With the unemployment rate falling to a record low in April, strong employment figures tend to put upward pressure on prices. In April, average hourly wages for employees rose 3.3 percent on a year-over-year basis, meaning that, on average, prices rose faster than wages, and Canadians experienced a decline in purchasing power, revealed Statistics Canada.
On a monthly basis, the CPI rose 0.6 percent in April after a 1.4 percent gain in March. On a seasonally adjusted monthly basis, the CPI rose 0.7 percent.
"There's no respite yet for Canadian consumers when it comes to inflationary pressures," Canadian Imperial Bank of Commerce economist Andrew Grantham said in a market report.
He said that the fact that inflation is pushing further above the central bank's forecasts virtually guarantees another 50 basis point hike at its next meeting in June and that it could well follow that up with another outsized move to get the overnight rate to the bottom end of its neutral range, or 2 percent to 3 percent.
However, after that, signs of a slowing in the domestic economy and home-grown inflationary pressures should slow down the pace of rate hikes, Grantham said.
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