Canada's annual inflation rate matches 18-year high, set to keep rising

People walk in the Eaton Centre shopping mall, as the provincial phase 2 of reopening from the coronavirus disease (COVID-19) restrictions begins in Toronto, Ontario, Canada June 24, 2020. REUTERS/Carlos Osorio/File Photo

OTTAWA, Nov 17 (Reuters) - Canada's annual inflation rate accelerated again in October, matching a February 2003 high, led by sharp rises in gasoline and housing prices, data showed on Wednesday, with analysts expecting more heat ahead.

Inflation rose to 4.7%, in line with expectations, up from 4.4% in September, Statistics Canada data showed. It was the seventh consecutive month in which headline inflation topped the Bank of Canada's 1-3% control range.

Prices rose in all eight major component groups for the second month in a row. Analysts said that trend was likely to continue.

"There is more heat ahead, particularly with the Vancouver port disruptions. And I think we are going to get inflation crossing well above 5% by the end of the year," said Derek Holt, vice president of capital market economics at Scotiabank.

Rail access to Canada's largest port, the Port of Vancouver, has been cut off by deadly flooding and landslides in the West Coast province of British Columbia. read more

CPI common, which the central bank calls the best gauge of the economy's underperformance, was unchanged at 1.8%.

"This doesn't change anything for the Bank of Canada. This is in line with their forecast," said Andrew Kelvin, chief Canada strategist at TD Securities, noting that while inflation is hot, economic growth has fallen short of the central bank's expectations.

The Bank of Canada signaled last month that it could hike its overnight interest rate as early as April 2022, while warning inflation was likely to rise further this year and stay above target through most of next year. read more

The Canadian dollar was trading 0.2% lower at 1.2580 to the greenback, or 79.49 U.S. cents.

Reporting by Julie Gordon and David Ljunggren in Ottawa, additional reporting by Fergal Smith and Nichola Saminather in Toronto; Editing by Andrew Heavens, Bernadette Baum and Andrea Ricci

Our Standards: The Thomson Reuters Trust Principles.

Thomson Reuters

Covers Canadian political, economic and general news as well as breaking news across North America, previously based in London and Moscow and a winner of Reuters’ Treasury scoop of the year.