The Globe and Mail reports in its Thursday, March 18, edition that Canada's annual inflation rose 1.1 per cent in February, compared with 1 per cent in January, Statistics Canada said on Wednesday. The Globe's Mark Rendell writes that year-over-year growth in the Consumer Price Index last month was driven by gas prices, which rose 5 per cent year on year and 6.5 per cent compared with January. This was offset by a drop in prices of clothing, travel accommodation and phone services.
Economists expect the annual rate of inflation to pick up significantly in the coming months as current gasoline prices are compared with the rock-bottom prices of last March and April, when the early COVID-19 lockdowns cratered oil prices. Bond markets have also been pricing in higher inflation expectations owing to vaccine approvals and additional rounds of fiscal stimulus.
Inflation, however, remains muted, with analysts calling February's CPI increase "tame" and "modest."
RBC economist Nathan Janzen says inflation concerns are "less about current trends and more about the potential for a surge in household spending as the economy reopens, potentially outpacing growth in supply, particularly of hospitality services."
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