CanadaPolitics

Inflation rate increased to 2.9% in March as gas prices rose

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Statistics Canada says the annual inflation rate ticked higher in March than in February, boosted by higher gasoline prices.

The agency says its consumer price index for March was up 2.9 per cent compared with a year ago, up from a 2.8 per cent year-over-year increase in February.

The increase came as gasoline prices rose 4.5 per cent compared with a year earlier, helped higher by an increase in global oil prices.

“Higher global prices for crude oil stemmed from supply concerns amid geopolitical conflict and continued voluntary production cuts, leading to higher prices at the pump,” Statistics Canada said in its update.

The agency said prices for services continued to rise in March, which was driven by air transportation and rent. These costs outpaced the price for goods, which slowed on a yearly basis in March compared with February.

It also said that on a monthly basis, gas prices rose faster in Western Canada in March than in the eastern parts of the country.

Meanwhile, shelter prices continued to contribute to overall inflation as they were up 6.5 per cent compared with a year ago.

Mortgage interest costs in March rose 25.4 per cent on a year-over-year basis, while rent prices in March increased 8.5 per cent compared with a year earlier.

“Among other factors, a higher interest rate environment, which can create barriers to homeownership, put upward pressure on the index,” the agency said.

The inflation report will be scrutinized by the Bank of Canada, which kept its key interest rate target on hold last week at five per cent, but said it is “within the realm of possibilities” that it could cut interest rates in June.

The central bank has said it is seeing what it needs to see but needs to see it for longer to be confident that progress toward price stability will be sustained.

Excluding gasoline, Statistics Canada says the annual inflation rate for March was 2.8 per cent, down from 2.9 per cent in February.

Across Canada, the agency said inflation rose at a faster pace in seven provinces.

“Prices rose at a faster rate in March compared with February in Atlantic Canada primarily due to an acceleration in prices for fuel oil and other fuels.”

Inflation rates in Canadian provinces in February and March, 2024
Inflation rates in Canadian provinces in February and March 2024. (Statistics Canada/handout)

The inflation report comes as the federal government prepares to release its budget on Tuesday afternoon.

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