OTTAWA: Canada’s annual inflation rate rose to 2.5 percent in June, its highest level in more than six years, on the back of higher fuel and food prices, the government said Friday.
Inflation had risen 2.2 percent in May, and the June figure was higher than analysts had expected. It was the highest rate since early 2012, when inflation stood at 2.5 percent in January that year, and 2.6 percent in February.
Last week, Canada’s central bank raised the country’s benchmark interest rate to 1.5 percent in a bid to tame rising prices. The Group of Seven economy is seeking to keep inflation at or near a target of two percent.
The Bank of Canada forecast that inflation would settle back to two percent “by the second half of 2019.”
The spike in prices of goods and services in June will “boost expectations for a follow-up hike from the Bank of Canada in the near-term,” said Royce Mendes, an economist for CIBC.
According to Statistics Canada, June inflation “reflects increases in prices for gasoline and food purchased from restaurants, as well as offsetting factors such as lower price inflation for electricity and telephone services.”
“These movements coincide with recent improvements in the economy and the labor market, as well as an increase in oil prices,” it added. —AFP