As Canada's inflation remains stable, increases in interest rates stand still

OTTAWA • If the Bank of Canada was seeking a justification to finally begin to pull the trigger on interest rates is unlikely inflation figures on Friday gave its goal of closer .

While the annual rate of price increase rose slightly more than expected last month, he was still in the comfort zone of the central bank.

And despite a series of strong economic figures - pointing to a moderate and steady growth - the last debt crisis flare-up in Europe will overwhelm national considerations, according to BMO Capital Markets deputy chief economist Douglas Porter. "Look at the bank to maintain its tough talk, but not to act on it soon."

The index of consumer prices rose 2% in April from a year ago, with increases in the eight categories tracked by Statistics Canada.

Increase in the CPI last month put right at the Bank of Canada in mid-target range of 1% and 3%. But the reading of 2% was slightly higher than the average forecast of 1.9% of analysts, who had the same level as in March.

The base rate - the stripping of volatile elements, such as certain food and energy - rose at an annual rate of 2.1% from 1.9% a month earlier. Market expectations were for the base rate to remain at Mars.

"I find it interesting that there is some underlying strength of inflation, but I do not think that's enough to be concerned at this stage," said Mr. Porter.

Surprisingly, energy costs rose in April at a slower pace than the overall index for the first time since October 2009, with rising gas prices slows, electricity and natural gas.

"Gas prices have risen in recent months, pushing the gasoline index in April to its highest level since July 2008," said Statistics Canada. "Nevertheless, the increase from year to year in gasoline prices in April was the lowest since September 2010, partly due to near-record prices in April 2011."

In fact, the relaxation energy prices had a dampening effect on the overall number. Excluding energy costs, the CPI rose 2.1% in April from a year earlier, after rising 1.6% in March.

By province, Newfoundland and Labrador had the highest rate of inflation last month, to 3%. Nova Scotia and New Brunswick were also above the national average, both at 2.6%. The lowest rate was in Alberta, at 0.8% on lower costs of electricity and natural gas, while British Columbia has experienced an annual increase of 1.6%.

Between Quebec, 2.4%, and Ontario and Saskatchewan, both at 2.1%.