Canada's 1.8% February Inflation May Be the Calm Before the Storm, Economists Warn of Spike Ahead

Canada's annual inflation rate slowed to 1.8% in February, but economists warn the number may be the last calm reading before a sharp rise driven by the Iran war. Since the conflict began at the end of February, oil prices have jumped 40 to 50%, an increase not captured in Statistics Canada's February Consumer Price Index. Vancouver School of Economics Professor Paul Beaudry says rising gas prices feed directly into inflation with no way around it and expects higher numbers in March. RBC has already raised its headline inflation forecast for March to 2.4%, assuming higher oil prices. The Bank of Canada's interest rate currently sits at 2.25%, with its next rate decision due Wednesday. Beaudry, a former Bank of Canada deputy governor, does not expect a rate change unless the war expands further. Signal49 Research chief economist Pedro Antunes agrees the bank will hold steady until more is known about inflation's spread beyond energy.