Canadian shoppers who kept the economy going during the 2008 financial crisis and the recession that followed are coming through again.
Core consumer prices rose 2.4 percent in March from a year earlier, the most since December 2008, and February retail sales climbed 1.7 percent, Statistics Canada said Friday from Ottawa. Price gains showed up in everything from text messages to fresh meat to cars.
Consumer spending fueled by low interest rates has been among the biggest sources of growth since a recession that started at the end of 2008, with manufacturing and business investment curtailed by weak global demand. Today’s retail figures showed gains in every major category, from a 5.6 percent increase at general merchandise stores to 0.9 percent at automobile dealers.
Bank of Canada Governor Stephen Poloz said two days ago the recent damage to the economy from collapsing oil prices would give way to more positive developments -- from exports to investment -- by midyear. That’s in contrast to January, when Poloz said the oil shock required policy makers to cut interest rates by a quarter percentage point as insurance.
“Today’s data lends support to the Bank of Canada’s fresh bias,” Derek Holt, Scotiabank’s vice-president of economics, said in a telephone interview from Toronto. The next rate decision is May 27, preceded by one more set each of inflation and retail sales data.
Canada household spending accounts for about 59 percent of gross domestic product, according to Bloomberg calculations on Statistics Canada data.
Canada’s currency climbed as much as 0.8 percent to C$1.2088 per U.S. dollar, the strongest since Jan. 21. It was down 0.4 percent at 1:36 p.m. in Toronto. Yields on benchmark government two-year bonds rose 5 basis points to 0.63 percent, the third straight increase.
“The combination of strong retail sales in February and the highest annual core inflation since 2008 negates the need for additional rate cuts in Canada,” National Bank Financial economists Stefane Marion and Matthieu Arseneau wrote in a research note.
Bank of Canada policy makers predicted Wednesday inflation will return to target in the first quarter of 2016, about a year earlier than they forecast in January, citing a weaker currency that’s making imports more expensive.
Passenger vehicle prices swung to a 1.8 percent rise in March from a year earlier after falling at a 1 percent pace in February, Statistics Canada said. Meat costs rose 11.8 percent and telephone services 6.3 percent.
Even with the gains, total inflation is still reflecting major economic slack. Consumer prices accelerated to 1.2 percent in March after two months at 1 percent, the bottom of the central bank’s target band.
Gasoline fell 19.2 percent in March from 12 months earlier, less than the February pace of 21.8 percent, Statistics Canada said. On a monthly basis, gasoline costs rose 6.3 percent in March after February’s 9.4 percent increase.
Excluding gasoline, the inflation rate was 2.2 percent in March from 12 months earlier, the same pace as in February.
Total inflation was 0.7 percent in March from a month earlier and the core rate was 0.6 percent. Both increases exceeded economist forecasts of 0.6 percent and 0.3 percent.
(A previous version of this story corrected the month in 2008 when core inflation was last at 2.4 percent.)