Inflation increased 2.2% in Canada over the month of February, its highest rate since October 2014, and up from 1.7% just one month before.

Upward price pressures came primarily from energy costs, which increased 5.3%. Year-on-year, gasoline has increased 12.6%. Other price drivers include restaurant food (4%), passenger vehicles (2.5%), and mortgage interest cost (2.3%).

Statistics Canada’s core inflation index also picked up speed to climb just over 2%. The index omits volatile factors such as energy costs to indicate a longer term trend of where inflation is heading.

Impact

February’s inflation numbers came in above the Bank of Canada’s target rate of 2.2%, and they could force some difficult decisions for Governor Stephen Poloz.  Poloz has maintained a lagging pace with interest rates south of the border, raising the benchmark rate three times since last summer, behind the US Federal Reserve’s six hikes. He opted to hold rates steady earlier this month citing the uncertainty surrounding ongoing NAFTA renegotiations with the United States.