The annual pace of inflation rose in April for the first time since it peaked in June last year, a move some economists say will test the Bank of Canada’s decision to pause hiking interest rates if the economy does not cool as expected later this year.

Statistics Canada said Tuesday its consumer price index was up 4.4 per cent compared with a year ago, up from a year-over-year increase of 4.3 per cent in March.

Tuan Nguyen, an economist with accounting and consultancy RSM Canada, said he expects a change in the Bank of Canada’s tone in its rate decision next month and added that he thinks rate cuts later this year are off the table, based on the latest inflation report.

The Bank of Canada has forecast that the annual inflation rate will come down to about three per cent in the coming months, but suggested that a return to its target of two per cent will take longer.

Bank of Canada governor Tiff Macklem has said that if the central bank starts to see signs that inflation is likely to get stuck materially above its two per cent target it is prepared to raise rates further.

The central bank’s key interest rate has been on hold at 4.5 per cent, but its governing council considered raising rates last month before deciding to remain on pause.

The bank’s next interest rate decision is set for June 7, ahead of the May jobs report from Statistics Canada on June 9.

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