Canada's Inflation Rate

May 21, 2010
Today Statistics Canada released its inflation rate for the month of April 2010. The inflation rate rose from 1.4 percent in March to 1.8 percent in April. The biggest price increases in the inflation consumer basket came from gasoline. Gas prices were 16.3 percent higher over last year. New car sales prices also rose over last year by 5.3 percent.

Bank of Canada's core rate, which excludes energy and food, rose by 1.9 percent for the 12-months ending April 30, 2010. The Bank of Canada uses this rate as a basis for determining monetary policy. If inflation rates rise too high then the Bank of Canada raises interest rates to help stop the rise of inflation. The Bank of Canada will announce on June 1, 2010 whether or not there will be any changes to the interest rate.

Interest rates and inflation also affect the value of the Canadian dollar. Higher interest rates mean a rise in the Canadian dollar relative to other currencies.

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