Canada inflation edges upward to 6.8%

Canadians paid 6.8 percent more for goods and services in April than the previous year, owing primarily to higher food and housing costs, according to the government statistical agency on Wednesday.

This was a slight increase from the previous month, but analysts predict that prices will continue to rise, as will the central bank’s key lending rates in an attempt to combat inflation.

“What went up still isn’t coming down in Canadian inflation, and might not anytime soon,” commented Desjardins economist Royce Mendes.

“Today’s data will only solidify bets for consecutive 50bp (basis point) moves in June and July” by the Bank of Canada, he said in a research note. Its benchmark lending rate currently stands at 1.0 percent.

Statistics Canada blamed spillover effects of Russia’s invasion of Ukraine for rising prices for energy, commodities and food.

Both Russia and Ukraine are major wheat exporters. Poor weather in several growing regions, and farmers facing higher costs for fertilizer and natural gas also impacted prices at grocery stores.

Higher energy prices to heat homes, meanwhile, pushed up housing costs, on top of a booming real estate market that is only now starting to show signs of weakening.

However, gasoline prices fell slightly month over month due to lower-than-expected global crude oil demand.

Strong employment in Canada has also pushed up prices for all goods and services, outpacing wage increases and causing Canadians to lose purchasing power.