While rising gas prices helped to drive up Canada’s annual inflation rate, mortgage interest costs fell for the second consecutive month.
Gasoline prices climbed 2.8 per cent in January — its highest level since August of 2008 — pushing the inflation rate to 2.5 per cent, reversing December’s 0.6 per cent decline, according to Statistics Canada.
Shelter costs went up 2.1 per cent in the 12 months to January, following a 1.8 per cent increase posted in December. In addition to electricity and fuel oil, consumers also paid more in homeowners' replacement costs. Conversely, mortgage interest cost decreased 0.4 per cent in January after falling 0.7 per cent the month before.
Underlying core inflation — which excludes volatile items such as some fresh food and gas — rose to 2.1 per cent, one tick higher than the Bank of Canada’s target.
Another key contributor to inflation remains food, which in January cost 4.2 per cent more than a year ago, although food prices continue to moderate.
Excluding those two items, inflation would be a tepid 1.6 per cent, the agency said. That is likely to give the Bank of Canada comfort that inflation remains well in control despite the persistent above-target readings. The central bank forecasts inflation to fall to about 1.5 per cent by mid-year.
Overall, seven of the eight major price components that Statistics Canada tracks registered increases in January, the lone exception being recreation, education and reading.
Most of the inflation occurred in Ontario and Quebec, at about half a point each, with the other provinces seeing relatively flat pricing.
Regionally, annual inflation was highest New Brunswick at 3.2 per cent last month and lowest in British Columbia, at 1.7 per cent.
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