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Impact of Unexpected Rise in Canadian Inflation

Last Updated: 18.5.2023 18:45

In a surprising turn of events, Canada’s annual inflation rate surged for the first time in ten months this April. Contrary to the anticipated slight dip to 4.1%, the inflation rate climbed to 4.4%. This unexpected uptick is likely to reignite discussions around the interest rate, which has been stable since January. 

The Bank of Canada (BoC), after holding steady at its last two policy meetings, may have to reconsider its stance, especially given the steady underlying price pressures. The central bank, which has already implemented eight consecutive rate hikes, is on alert, ready to increase interest rates further if inflation remains significantly above its 2% target.

According to financial markets, the likelihood of a rate increase at the next BOC policy meeting on June 7 has almost doubled. This comes amid growing concerns about a potential rise in core inflation, with primary contributors being higher rent and mortgage interest costs.

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Despite the overall inflationary trend, grocery prices grew slower in April than in March. However, gasoline prices saw a significant month-over-month increase, largely due to OPEC+’s decision to cut oil production.

In light of these developments, investors should brace for potential shifts in the financial landscape, with the Canadian dollar already showing a slight upward trend. As Canada grapples with these inflationary pressures, staying informed and preparing for the possible economic implications is essential.

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Justin Hopper

Justin Hopper is an editor of the digital media at Wealthy VC and TCI. If you have questions don't hesitate to reach out! Twitter | Email

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