Canada's inflation rate ticks up to 2% in April

Canada's inflation rate rose to two per cent in April, from 1.9 per cent the previous month.

The uptick, reported by Statistics Canada on Wednesday, was in line with what economists polled by Bloomberg had been expecting.

While gasoline and other energy prices have risen sharply since the fall, on an annual basis they are actually cheaper than they were this time last year — so much so that if the impact of gas prices were to be stripped out, the inflation rate would have been 2.3 per cent.

While gasoline is cheaper than it was 12 months ago, compared to March there was a huge jump, largely because of a new carbon tax being implemented in New Brunswick, Ontario, Manitoba, P.E.I. and Saskatchewan, while British Columbia hiked its existing levy.

All told, gasoline prices were 10 per cent higher in April than they were in March — but still cheaper on average than they were a year ago.

Scotiabank economist Derek Holt noticed an interesting one-time factor that nudged the rate higher: travel.

The price of travel and tours was 8.4 per cent higher in April than it was a year ago partly because Easter came during the month.

"The increase was partly attributable to the fact that the first two days of the Easter long weekend, a popular time for travel, took place in April this year," Statistics Canada said.

Also, hundreds of Boeing 737 Max jets being grounded increased the price of airline tickets to much higher than usual, because of the sudden lack of seats.

"Boeing's challenges and the Easter bunny therefore provided a bit of a false lift to inflation last month that won't be sustained going forward," Holt noted.

Food prices going up, but slower

Food prices have also risen sharply in the past year, but at a slower rate than in previous months. 

Statistics Canada said food prices have risen by 2.9 per cent between April 2018 and last month. While higher than the overall inflation rate, that's down from a 3.6 per cent pace of gain between March 2018 and 2019.

The price of fresh vegetables has risen by 14.5 per cent over the past year, while fresh fruit has increased by 7.8 per cent, the data agency calculates. 

In terms of food prices, between April 2018 and April 2019:

• Apples went up by more than 20 per cent.
• Potatoes went up by almost 14 per cent.
• Lettuce went up by more than nine per cent.
• Bananas were more than two per cent cheaper.
• Beef was almost one per cent cheaper.
• Pork was almost one per cent cheaper.
• Chicken got more than one per cent cheaper.

Toronto-Dominion Bank economist James Marple said that all in all, the numbers were a mixed bag.

"Higher energy prices, but slowing food price inflation left overall prices up two per cent in April," he said, adding that he doesn't think the inflation rate will change enough to convince the Bank of Canada to change its interest rate policy in either direction for a while.

"Overall … inflation remains well contained and is likely to remain there over the foreseeable future."