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Canada's Annual Inflation Rate Unchanged in March at 2.2 Per Cent

Posted on: Thursday, 20 April 2006, 09:01 CDT

OTTAWA (CP) - The annual inflation rate held steady in March at 2.2 per cent, despite a slight rise in the price of gasoline last month, says Statistics Canada.

That's the same annual rate that was reported in February.

Gasoline prices at the pumps were 7.4 per cent higher in March, compared with the same month one year ago. But that was offset by lower prices for computer gear, as well as clothing.

Still, if energy prices were excluded from the calculation, inflation would have been just 1.7 per cent last month, compared with one year earlier.

The core inflation rate, which excludes many volatile energy and food prices, rose to 1.7 per cent.

That's the rate most closely watched by the Bank of Canada, which is expected to raise its key short-term interest rate of 3.75 per cent next Tuesday to keep a lid on inflation.

Analysts have predicted the central bank will raise its overnight rate by a quarter-point to four per cent, and many expect it may stop at that level.

And with core inflation remaining well within the central bank's target band of one to three per cent, the latest consumer price index isn't likely to cause much concern.

Still, a dramatic jump in the price of oil and corresponding increases at the gasoline prices in recent days could add to inflation in the months ahead.

Last month alone, gasoline prices were rising by as much as 9.1 per cent in Alberta and 5.7 per cent in Newfoundland and Labrador, the agency said.

Homeowner replacement costs, which represents the worn-out parts of a home, jumped by six per cent in March, compared with one year earlier.

Offsetting that was a sizable 16.7 per cent drop in the cost of computer gear, plus cheaper clothing for men and women.

Compared with February, the price of fresh vegetables dropped by 6.5 per cent in March, while fresh fruit was 3.1 per cent less expensive, mainly due to cheap oranges.

Source: Canadian Press

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