Canada: Inflation jumps to 3.4% in April - TD Bank Financial Group

ActionForex reports that analysts at TD Bank Financial Group discuss Canada's April CPI data.

"The Consumer Price Index (CPI) jumped to 3.4% year-on-year (y/y) in April, up over a percentage point from 2.2% in March, and above of the median forecast for 3.2%."

"Gasoline prices were a big part of the year-on-year gain, up 62.5% from their lows in April 2020. Other energy prices were also higher relative to a year ago."

"Excluding energy, inflation would have been softer at 1.6% (still up from 1.1% in March). Clothing and footwear saw the first year-on-year gain since March 2020, jumping to positive 1.8% y/y from -5.4% in March. Food price growth, on the other hand, slowed in April to 0.9% (from 1.8% in March)."

"The Bank of Canada’s core inflation measures all ticked up in April, CPI-common rose to 1.7% (from 1.5%), CPI-median and CPI-trim both rose to 2.3% (from 2.1%) in April."

"With the economy still getting over the coronavirus pandemic, the aftermath of the virus and the policy response to it are beginning to come into view. The jump in prices reflects both the plunge a year ago and the recovery from it in the year hence.  In April, there were also more clear signs of recovery in the most deeply impacted sectors like travel, healthcare (dental especially) and clothing. Price pressures are likely to continue to percolate as demand accelerates and supply takes time to catch up."