Canada inflation jumps, rate change still seen far off
By David Ljunggren
OTTAWA (Reuters) - Canada's annual inflation rate jumped more than expected in February, but analysts said the spike was unlikely to pressure the Bank of Canada to raise interest rates any time soon.
The year-on-year rate rose to 1.2 percent from a three-year-low of 0.5 percent in January on higher gas and auto prices, Statistics Canada said on Wednesday.
That's still well below the midpoint of the Bank of Canada's 1.0 to 3.0 percent target range.
The central bank has said it expects to raise interest rates one day, despite still-low year-on-year inflation. But the time frame for a possible rate hike has kept stretching out as domestic and global economies have stumbled.
"There will be a short-lived pop in the currency, but I don't think it is going to make a fundamental change in the bank's outlook," said Doug Porter, chief economist at BMO Capital Markets. "I don't think this advances the timetable on Bank of Canada rate hikes."
Analysts surveyed by Reuters in late February didn't expect any move by the central bank before next year.
Monthly inflation jumped to 1.2 percent, the steepest month-on-month jump in prices since January 1991, when the federal government introduced a goods and services tax and prices were also up 1.2 percent on the month.
Seven of eight components in the consumer price index were higher in February, with transportation prices - including gas prices - up particularly steeply. Continued...