March 23 (Bloomberg) -- Canadian inflation accelerated for a second month in February on higher costs for electricity and meat, as the central bank’s key price measure reached the fastest in more than three years.
The consumer price index rose 2.6 percent in February from a year earlier, following January’s 2.5 percent gain, Ottawa-based Statistics Canada said. The core rate, which excludes eight volatile items, accelerated to 2.3 percent, the fastest since December 2008. Economists surveyed by Bloomberg predicted the total rate would quicken to 2.7 percent and core inflation would be 2.2 percent, according to the median of 25 estimates.
The Bank of Canada said March 8 that inflation will be higher than it had forecast in January because of “reduced economic slack and higher oil prices.” Policy makers also said price gains will slow in the second quarter and inflation will then stay near 2 percent through next year.
“We still have enough geopolitical risks hanging over the market” for the Bank of Canada to leave rates unchanged instead of tightening policy to brake inflation, said Derek Holt, Scotia Capital’s vice president of economics in Toronto. “Consumers are going to be more reticent to pay higher prices going forward.”
The Canadian dollar depreciated 0.2 percent to C$1.0016 per U.S. dollar at 7:19 a.m. Toronto time. One Canadian dollar buys 99.84 U.S. cents.
Gasoline prices rose 8.9 percent in February from a year earlier, while electricity costs rose 8.7 percent, Statistics Canada said today.
“We continue to suffer from the rising fuel prices, which combined with intense competition, contributed to a lower margins,” tour operator Transat A.T. Inc. Chief Financial Officer Denis Petrin said on a March 15 earnings call.
Food prices rose 4.1 percent on an annual basis, including a 7.2 percent increase in bread and 7.1 percent for meat.
Bank of Canada Governor Mark Carney has kept his policy interest rate at 1 percent since September 2010, the longest pause since the 1950s, as weak global demand curbs exports. The bank has a 2 percent inflation target and uses the core measure as a guide because it reduces short-term price volatility. The core rate includes electricity and excludes gasoline.
On a monthly basis, both total and core inflation rose 0.4 percent in February. Economists surveyed by Bloomberg predicted monthly inflation of 0.4 percent and a 0.3 percent advance in core prices.
Seasonally adjusted inflation rose 0.1 percent in February from the month before. Seasonally adjusted core inflation gained 0.2 percent.
Today’s release marks the final time Statistics Canada publishes inflation data at 7 a.m. in Ottawa. The agency is switching to a standard 8:30 a.m. release time for all indicators beginning in April.
To contact the reporter on this story: Greg Quinn in Ottawa at firstname.lastname@example.org