The Bank of Canada is facing a crucial decision as the country’s inflation rate unexpectedly spiked last month, marking the first increase in almost a year.
While inflation had been cooling off, new data reveals that it reached its peak at 8.1%, with April’s annual rate settling at 4.4%, slightly higher than March.
CTV’s Manitoba Bureau Chief, Jill Macyshon, reports that the surge in inflation is primarily fueled by rising prices in gas, housing, and groceries.
Canadians were hopeful that the cost of living was stabilizing, but the latest inflation figures indicate otherwise.
Food prices, which had been a significant driver, experienced further increases in April, with certain items such as fresh fruit, coffee, and tea becoming more expensive.
However, lettuce prices dropped.
Unfortunately, shoppers are not experiencing noticeable decreases in overall costs.
Fuel prices have seen a month-over-month increase of 6.3% from March to April, while rent prices have risen by 6.1% year over year.
Additionally, mortgage interest costs have surged by a substantial 28.5% compared to the previous year.
This surge in interest rates, implemented to curb inflation, is now contributing to its increase.
The current rise in inflation marks the first since rates peaked in June of the previous year, when the inflation rate reached 8.1%.
The Bank of Canada has set a target of 2% for inflation, and all eyes are now on the May rates to determine if the upward trend will persist.
The question arises as to when the bank’s patience will be tested, and this latest inflation number may tilt the balance.
With the looming possibility of interest rate hikes, the Bank of Canada’s next overnight rate target will be issued on June 7th.
The outcome of this decision will be closely monitored by economists and Canadians alike.
