Canada’s inflation rate rose to its highest level since 2011 last month, as higher prices for airplane tickets, tourism and gasoline pushed the rate to three percent.
Statistics Canada said on Friday that the consumer price index hit an annual rate of three percent in July. That’s up from 2.5 percent in June, which was already the highest level in more than six years.
All eight components that the data agency tracks to come up with the rate were higher, and the inflation rate also rose in every single province.
Here are the annual inflation rates for every province:
Newfoundland and Labrador, 2.7%.
Prince Edward Island, 3.4%.
Nova Scotia, 2.7%.
New Brunswick, 2.7%.
British Columbia, 3.3%.
Across the country as a whole, energy costs have risen by 14.2 percent in the past year. Gasoline, in particular, is more than 25 percent more expensive now than it was a year ago.
The price of air transportation was also a big factor in the higher rate, with the costs of flying increasing by more than 28 percent in the past year, according to Statistics Canada’s tabulations.
But that “looks to be a one-off,” Toronto-Dominion Bank economist James Marple said of the spike, “reflecting the impact of higher fuel and labour costs on the airline industry.”
Restaurant food has risen by 4.4 percent in the past year, and mortgage interest costs are up by 5.2 per cent.
On the flip side, natural gas prices have declined by 5.7 percent in the past year, and the price of telephone services has declined by 5.1 per cent.
The strong inflation number caused the loonie to gain half a cent to 76.50 cents US. That’s because investors are interpreting the strong inflation number as a sign the Bank of Canada will be more likely to raise its benchmark interest rate next month as a result (which would make the Canadian dollar more attractive for foreign investors.)
Trading in investments known as swaps currently imply there’s about a 1 in 3 chance of a rate hike next month, according to Bloomberg. If one doesn’t come in September, the odds rise to more than three in four for the following month.
“Maintaining stable inflation is likely to require further rate hikes by the central bank, with the next one likely coming in October,” Marple said.