Canada's annual inflation rate climbed to 2.4 per cent in October, its highest level in two years, as consumers felt the sting of higher prices for gasoline, cars, shelter and food.
The rate is up from 1.9 per cent in September, Statistics Canada said in a release Tuesday.
The increase in the annualized figure was well above what analysts had forecast, and is also likely to spark some concern with Bank of Canada officials.
“If we see anything close to a repeat performance in the next few months, there will be some serious misgivings at the bank about keeping rates at one per cent for much longer,” BMO economist Doug Porter said.
The agency blamed higher energy costs for most of the increase.
Energy prices advanced 9.1 per cent during the 12 months to October, following a 5.6 per cent increase in September. In addition to rising gasoline prices, prices for electricity increased 8.1 per cent, while natural gas prices rose 10.6 per cent.
Prices for the purchase of passenger vehicles rose 4.9 per cent in the 12 months to October, following a five per cent annual increase in September. Transportation costs rose 4.6 per cent, while shelter costs increased 2.8 per cent.
On a month-to-month basis, Canadians paid 0.4 per cent more in October for a basket of items than in September.
Economists had expected an inflation increase to about 2.2 per cent from a recent pick-up in oil prices and the continuing effects of the new harmonized sales tax in Ontario and British Columbia. But the higher number suggests that inflation may be more of a cause for concern.
Even the underlying core inflation, which excludes volatile items like gasoline, rose three-10ths of a point to 1.8 per cent, edging nearer to the Bank of Canada's two per cent target.
Clothing, footwear down
“The bigger story was on underlying inflation, which was also considerably higher than expected,” Porter said.
Meanwhile, clothing and footwear edged down 0.1 per cent, considerably less than the 2.2 per cent decline seen in September.
Newspaper prices and audio equipment were significantly higher, rising two and 2.3 per cent, respectively. The gain in the latter was the highest since the GST was implemented in 1991.
Core inflation looks set to dip next month, thanks to an easy comparison from a year ago, when prices jumped 0.4 per cent on a monthly basis, Porter noted.
“The Bank of Canada’s call of 1.6 per cent average core inflation for Q4 still looks doable, but there is a good chance they may miss on the low side this time.”
CBC NewsInflation rate rises to 2.4%