Statistics Canada Says Annual Inflation Rate Hit 6.7% in March

As prices rose faster on an annual basis in March, average hourly wages were up by 3.4 percent, but still far behind inflation and eating into consumers’ purchasing power. (Jonathan Hayward/The Canadian Press)

The annual rate of inflation hit 6.7 percent in March, the fastest year-over-year increase in the consumer price index since January 1991, Statistics Canada said Wednesday.

The increase compared with gain of 5.7 percent in February.

Fuelling much of the increase in March were higher prices at the pumps as gasoline prices rose 39.8 percent compared with the same month one year earlier.

Statistics Canada said the consumer price index would have been up 5.5 percent year-over-year if it had excluded gasoline from its calculations.

The agency noted price pressures remained widespread in March on the back of the country’s hot housing market, supply-chain constraints and the war in Ukraine that has affected prices for oil and food.

The agency said homeowner replacement costs, which includes prices for new home prices, rose 12.9 percent year-over-year in March.

Grocery store prices rose 8.7 percent year-over-year, the fastest annual rate since March 2009, aided by the largest annual increase in dairy and egg prices since February 1983.

Russia’s invasion of Ukraine was also blamed for jumps in pasta prices and cereal, the latter rising at the fastest annual pace since June 1990.

Russia and Ukraine are major wheat exporters.

Provincially, Statistics Canada said growth was most pronounced in Prince Edward Island where prices rose 8.9 percent year-over-year.

As prices rose faster on an annual basis in March, average hourly wages were up by 3.4 percent, but still far behind inflation and eating into consumers’ purchasing power.

The growing rate of inflation has spooked economists and central bankers amid signs that Canadians are beginning to expect inflation to stay higher for longer.

Last week, the Bank of Canada increased its key policy rate by half a percentage point, raising the benchmark interest rate to one percent with warnings that more rate hikes are to come this year.

The average of the three core measures of inflation, which are considered better gauges of underlying price pressures and closely tracked by the Bank of Canada, was 3.77 percent in March. That the highest recorded since March 1991 and up from the 3.53 percent in February.