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The annual inflation rate in Canada rose to 2.2% in March of 2021 from 1.1% in February and slightly below market expectations of 2.3%.
This was the highest inflation rate since February of 2020, mainly attributable to a base-year effect caused by last year’s very low index level amid the Covid-19 pandemic.
Prices advanced faster primarily for transportation (7.1% vs 2.2% in February), of which gasoline (35.3% vs 5%), due to a base-year effect alongside growing global oil demand, as well as the continuation of production cuts by the OPEC.
Upward pressure came also from costs of shelter (2.4% vs 1.4%), linked to higher homeowners’ replacement costs. Excluding energy, inflation was 1.1%, slightly up from 1% in February.
On a monthly basis, consumer prices increased 0.5%, the same pace as in the prior month and slightly below market consensus of a 0.6% rise.
source:Core consumer prices in Canada increased 1.40 percent in March of 2021 over the same month in the previous year. source: Statistics Canada
Statistics Canada
BOC’s Macklem following the Financial System Review:
Not as much evidence of home flipping as in 2016-17
Recent rapid price increases in Canadian homes are not normal
House price rises are largely driven by fundamental demand
Supply has simply not been able to pivot to keep up with housing demand
Important parts of the economy remain very weak
We worry about housing but there are about 500,000 jobs that were lost in the pandemic and we have to worry about them too
There are about 200,000 students that have entered the workforce since the pandemic
We expect the rise in inflation will be temporary. Base effects will dissipate
“We have a lot of excess supply in this economy” and that will pull inflation down to target after base effects run off
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