WRAPUP 1-Canada's inflation hits 27-month high; central bank under pressure

Fri Jun 20, 2014 9:35am EDT
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* Overall inflation 2.3 pct in May, core 1.7 pct

* Forecast 2.1 pct for total inflation, 1.5 pct for core

* Inflation exceeds Bank of Canada's forecast and target

* Retail sales up 1.1 pct in April to record

* C$ rises; analysts say BoC needs to tone down low-inflation talk

By Randall Palmer

OTTAWA, June 20 (Reuters) - Costlier energy unexpectedly pushed Canada's annual inflation rate to a 27-month high of 2.3 percent in May from 2.0 percent in April, while a rise in the core rate also put pressure on the Bank of Canada to tone down its low-inflation concerns.

Statistics Canada reported on Friday that core inflation jumped to 1.7 percent, the highest since July 2012, from 1.4 percent in April. The median forecasts in a Reuters survey of economists were for 2.1 percent inflation overall and 1.5 percent for core, which strips out volatile elements.

"The low-inflation ship has sailed in Canada, and I think the Bank of Canada pretty much has to change their rhetoric as of the next meeting," said Bank of Montreal chief economist Doug Porter.   Continued...