Published: Sun, February 26, 2017
Economy | By Melissa Porter

Higher gas prices fuel January inflation surge

In Calgary, the price of regular gasoline from a self-serve filling station climbed by more than 12 per cent - almost 12 cents a litre - in a month.

All three new measures of core inflation the Bank of Canada established late past year showed underlying inflation below 2.0 per cent. CPI common, which the central bank says is the best correlation to the output gap, was furthest away from target, slipping to 1.3 per cent from 1.4 per cent.

Countrywide, the CPI rose 2.1% on a year-over-year basis in January, following a 1.5% gain in December, driven mostly by fuel costs.

However, gasoline wasn't the only consumer product that cost significantly more last month than at the start of 2016.

The shelter index rose 2.4% in the 12 months to January, with a gain of 4.3% in the homeowners' replacement cost index contributing the most to the gain.

In Edmonton, it climbed by 11.2 cents a litre, from 89.7 in December to 100.9 in January.

Those monthly gains were partially offset by lower prices for things like fresh or frozen pork (down 7.2 per cent), fresh or frozen beef (down 1.8 per cent) and recreational equipment and services, excluding recreational vehicles (down 1.7 per cent). The increase coincided with the implementation of new carbon-pricing policies in Ontario and Alberta.

A surge in gasoline prices pushed Canada's inflation up in January 2017.

Ontario has also introduced a new cap and trade system, but it's unclear if that has begun to flow through to prices.

"That was the big story as to why overall inflation is now back above two per cent for the first time in a couple of years", Porter said.

In the month of November, the permits that were given out for latest housing in Canada went down by 1.6 per cent to $5.1 billion, with heavy impacts from the fall in single-family home permits in Alberta.

Natural gas prices spiked by 42.3 per cent year over year in January, also driven in part by the carbon tax, Statistics Canada said.

Like this: