Annual pace of inflation creeps lower in February to 2.1 per cent

OTTAWA — The annual pace of inflation in Canada ticked lower last month as higher prices for gasoline were offset in part by lower costs for fresh fruit and vegetables.
Statistics Canada said Friday the consumer price index rose 2.0 per cent on a year-over-year basis in February, down from the 2.1 per cent increase in January. Economists had expected it to rise 2.1 per cent in February as well.
“After an upside surprise on inflation in January, today’s report was a bit more ho-hum,” wrote Royal Bank economist Josh Nye in a note to clients, adding that the report fits with the Bank of Canada’s narrative on slack in the economy.
“We doubt their neutral tone will change much at April’s meeting despite the solid run of data we’ve seen in recent months.”
The inflation report follows several recent indications that the economy is picking up, with stronger than expected figures in trade, job creation, manufacturing and retail sales.
Prices were higher in seven of the eight major components, with food the only one to decline.
Excluding gas, the February consumer price index was up 1.3 per cent compared with a year ago.
Transportation costs gained 6.6 per cent compared with a year ago, boosted by a 23.1 per cent rise in gas, which was at an unusually low level early last year. Shelter costs rose 2.2 per cent.
Food costs fell 2.3 per cent, with fresh vegetables dropping 14.0 per cent and fresh fruit slipping 13.3 per cent, partly reflecting the spike in prices last winter.
The annual pace of inflation slowed in seven provinces on a year-over-year basis in February while Ontario and B.C. both held steady at 2.3 per cent. Manitoba was the only province to show an increase in the annual pace of inflation.
Statistics Canada said the Bank of Canada’s three preferred measures for core inflation saw year-over-year increases last month of 1.3 per cent, 1.9 per cent and 1.6 per cent.