By Karan Landge

OTTAWA (MNI) – Statistics Canada is expected to report Friday that
Canadian inflation continued high in April at 3.3% at an annual rate, as
it was in March, according to analysts.

The expected 3.3% inflation rate is a consensus among analysts
surveyed by Market News International. On a month-over-month basis, the
basket of goods and services is expected to have risen by 0.4% from
March.

Statistics Canada last month reported that consumer prices rose
3.3% in March, on a year-over-year basis, spiking much higher than
the 2.2% annual rate in February.

As in previous months, energy prices are seen as the driving factor
in increasing inflation. They had risen by 12.8% at an annual rate in
March, following a 10.6% increase in February. Gasoline prices had risen
18.5% in March after a 15.7% increase in February. Prices for fuel oil
and other fuels had the largest influence increasing 31.3%, while
electricity prices had risen 4.3% in March.

Excluding energy, the CPI was up 2.4% in March, following a 1.4%
increase in February. Prices for food purchased from stores had risen
3.7% in March, the largest year-over-year advance since August 2009.
This increase followed a 2.0% gain in February.

Other items that had contributed significantly to the pickup in
prices in March were travel services, clothing, and the purchase of
passenger vehicles.

Stripping out eight of the most volatile items in the CPI basket of
goods and services, the core index was 1.7% in March and for April is
expected to have dropped to 1.5% year-over-year. On a monthly basis, it
is estimated to have increased by 0.1%, economists said.

Emanuella Enenajor, an economist at CIBC, expects the headline CPI
rate to be higher than the consensus in April, at “3.5% year-on-year due
to 0.3% monthly seasonally adjusted gain in the month of April.”

She attributed the key factors in the April story as being “higher
pump prices, gasoline prices and energy prices, which have been a trend
for several months as crude oil prices have increased. Food prices may
also have contributed.”

Enenajor expected an increase of 0.2% in core CPI, taking the
annual rate for the month to 1.6%.

Enenajor added, “We see price pressures building as the economy
moves towards full employment.”

Sal Guatieri, senior economist at Bank of Montreal Capital Markets,
expected CPI to “stabilize in March at the 3.3% annual rate with a 0.4%
increase in month-over-month basis.”

Gauteri said that the increase in gasoline prices is having some
impact in slowing consumer spending but stated that he expects
“inflationary pressure to subside as commodity prices adjust.”

“For the core measure, we think it will be restrained by low
clothing prices, following higher pricing for clothes in the previous
month, but given the strong Canadian dollar we would expect clothing
prices to pull back in April. We should also see much less increase in
traveler service prices in April.”

— Karan Landge is a reporter with Need To Know News In Ottawa

** Market News International Ottawa **

[TOPICS: MAUDS$,M$C$$$]