Canada's annual inflation rate jumped to a stronger-than-expected 2.1 percent in January, its highest for more than two years, government data showed on Friday, bolstering the Canadian dollar. Analysts said that the rise was unlikely to affect the Bank of Canada's monetary policy since underlying inflation was considerably tamer.
The main reason for the jump in overall inflation was a 20.6 percent year-on-year jump in gasoline prices, the largest yearly increase since September 2011, Statistics Canada said.
Once energy prices were stripped out, though, year-on-year inflation was only 1.4 percent.
Analysts polled by Reuters had forecast an annual rate of 1.6 percent, below the Bank of Canada's 2.0 percent target. Inflation in Canada has not been this strong since October 2014, when it hit 2.4 percent.
The central bank has held rates steady at 0.5 percent since cutting them twice in 2015, citing labor market slack and an output gap that the bank does not expect to close until mid-2018.
Consumers paid 2.4 percent more for shelter while food prices slipped by 2.1 percent from January 2016.
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