The annual rate of inflation accelerated to 2.4 per cent in March as the war in Iran sent fuel costs soaring, Statistics Canada said Monday.
That’s a jump of more than half a percentage point from the headline inflation rate of 1.8 per cent in February, though economists had widely expected the March figures to come in a tick higher.
Iran’s move to close of the Strait of Hormuz in response to U.S. and Israeli attacks and ongoing uncertainty over ceasefire talks has sent global fuel prices skyrocketing in recent weeks.
StatCan said March’s 21.2 per cent monthly increase in the price of gasoline was the largest on record.
The inflationary increase would have been even higher, the agency noted, but the federal government’s move to kill the consumer carbon price a year earlier was still taking some steam out of the annual inflation comparisons in March.
StatCan said inflation would have been 2.2 per cent in March if gasoline was taken out of the equation — a second consecutive monthly decline.
Food inflation, meanwhile, cooled to four per cent from 5.4 per cent in February as the lingering distortions of the federal government’s two-month “tax holiday” a year earlier fell out of the annual comparisons. That drove down inflation at restaurants and on some grocery items last month.
Fresh vegetable prices jumped 7.8 per cent year-over-year in March, which StatCan chalked up to recent tough growing conditions for cucumbers, peppers and celery.
The Bank of Canada will be paying close attention to the March inflation figures as it prepares for its next interest rate decision on April 29.
The central bank has signalled it will look through the initial inflationary spike tied to the Middle East conflict but will act to ensure higher gas prices don't turn into longer-term inflation.
