Canada’s inflation shot up to 2.6 per cent in February, a surprise jump that further clouds the economic outlook in a country facing an uncertain future with its key trading partner, the U.S.
Statistics Canada said price rises were “broad-based” but noted the expiration of a tax break midway through February was a key factor in driving price growth.
The 2.6 per cent year-on-year inflation surge follows a 1.9 per cent figure in January.
TD Economics called the inflation rise “a little hotter than expected,” and warned the ongoing tariff battle with the U.S. is expected to push prices higher.
President Donald Trump has threatened, withdrawn and imposed a dizzying array of tariffs on Canadian goods and more levies are expected to come into effect next month.
Canada has imposed retaliatory tariffs on a range of U.S. goods in a trade war between the neighbours who had typically swapped billions of dollars in goods each day.
“How tariffs play out remains highly uncertain,” TD Economics Managing Director Leslie Preston said, highlighting a “difficult” environment for Canada’s central bank as it seeks to control inflation over the coming months.
