Canada: Inflation increases in April
Inflation edged up to 4.4% in April, following March’s 4.3% and contrasting market expectations for a decline. Looking at the details of the release, prices for recreation, culture and transport rose at a faster pace, while prices for food and housing increased at a softer rate in April.
The trend pointed down mildly, with annual average inflation coming in at 6.4% in April (March: 6.6%). Meanwhile, core inflation edged down to 4.1% in April, from the previous month’s 4.3%.
Lastly, consumer prices rose 0.71% in April over the previous month, accelerating from March’s 0.52% increase. April’s result was the highest reading since October 2022.
On the monetary policy implications, TD Economics’ Leslie Preston said:
“Cooler inflation for demand-sensitive services inflation, or ‘supercore’ was the most encouraging development of the report, even though it was somewhat offset by hotter inflation for goods. This reinforces the challenge Governor Macklem has talked about in bringing inflation all the way back to 2%. This suggests that the BoC needs to remain vigilant to inflation pressures, and may need to hike again if momentum in the domestic economy does not cool as expected.”