Canada's annual inflation rate hit a surprise reading by rising to 4.4% in April, as higher protection costs contributed to the first acceleration in the consumer price index in 10 months, Statistics Canada data showed on Tuesday.
Analysts polled by Reuters expected the annual inflation rate to decline to 4.1% from 4.3% in March. The month-on-month reading, the consumer price index rose 0.7%, higher than the forecast increase of 0.4%.
Prices for groceries, however, rose at a slower pace in April than in March, helped by smaller price increases for fresh vegetables and coffee and tea, Statscan said. Excluding food and energy, prices rose 4.4% compared to a 4.5% increase in March.
The average of the Bank of Canada's (BoC) two core measures of core inflation, CPI-median and CPI-trim, came in at 4.2% versus 4.5% in March.
The central bank has kept rates unchanged at its last two policy-setting meetings as it assesses whether its eight consecutive rate hikes have been enough to tame inflation.
BoC Governor Tiff Macklem has said that Canadian inflation risks are stuck well above the Bank of Canada's 2% target, and if that happens the central bank is prepared to raise interest rates again.
Higher rental costs and mortgage interest contributed the most to the annual inflation rate in April, Statscan reported. The higher interest rate environment may have contributed to the increase in rents in April by stimulating higher rental demand, the agency said.
The month-on-month inflation rate was driven by petrol prices, which posted their biggest monthly increase since October, following announcements from OPEC+ to cut oil production, Statscan reported.
The Canadian dollar traded 0.3% higher at 1.3430 to the US dollar, or 74.46 U.S. cents.
