Shortly after last year’s worry about what Canada’s persistent disinflation might portend, the country’s inflation rate started rising faster than expectations. Indeed, Canada’s consumer price index (CPI) has now surpassed the consensus forecast for three consecutive months.

Although consumers often dread the prospect of rising prices, disinflation, or even outright deflation, can wreak far more havoc on an economy than inflation. And when a country is emerging from a period of economic weakness, inflation can be one of the first signs that an economy is revving up again.

According to Statistics Canada (StatCan), non-seasonally adjusted inflation rose 0.6 percent month over month, surpassing the consensus forecast by a substantial two-tenths of a percentage point, which was the same margin in each of the two prior months.

While Canada’s inflation may be perking up, on a year-over-basis it’s still toward the low end of the 1 percent to 3 percent target range that the Bank of Canada (BoC) uses to guide its monetary policy. The CPI rose 1.5 percent year over year in March, which was one-tenth of a point better than projected.

The goal of the BoC’s monetary policy is to target the midpoint of the aforementioned range, though the CPI has not increased at a rate anywhere near 2 percent since April 2012. Instead, it’s occupied the low end of the BoC’s control range, even dipping below the 1 percent threshold seven times since November 2012, hence the central bank’s concern about persistent disinflation.

Meanwhile, the core CPI, which excludes volatile items such as food and energy, climbed 1.3 percent year over year, which was in line with the consensus.

StatCan observed that the rise in CPI was led by energy prices, which climbed 4.6 percent year over year. In the BoC’s latest Monetary Policy Report, the central bank said that the total CPI will likely outpace core CPI in the coming quarters due to higher energy prices at the consumer level.

Gasoline prices were up 1.4 percent, while the natural gas index increased 17.9 percent, following a 5.5 percent rise in February. Prices for electricity rose 5.0 percent, while prices for fuel oil increased 9.1 percent.

Of the eight major CPI components, six posted price gains on a year-over-year basis, particularly shelter, transportation and food.

Shelter costs were up 2.7 percent, after climbing 2.2 percent the previous month. StatCan notes that the increase in March was the largest since December 2010.

Prices for transportation rose 1.7 percent year over year, following a 0.4 percent rise in February.

And food prices were up 1.5 percent versus a year ago. Economists with CIBC World Markets expect food prices will continue to head higher in the coming months because key food-producing regions were disrupted by extreme winter weather. And the fact that Canada imports much of its food means that consumers will pay more due to the lower exchange rate.

The aforementioned BoC report was published just prior to the latest CPI data. However, the central bank’s projections still seem in line with what the latest data suggest. While the bank believes core inflation will remain well below 2 percent at year end, it expects the total CPI to come much closer to its 2 percent target.

Even so, the BoC’s near-term growth expectations have become somewhat more muted as of late, with its forecast for full-year 2014 gross domestic product (GDP) growth revised slightly lower to 2.3 percent from 2.5 percent.

The good news is that the lower estimate is largely the result of the unusually harsh winter’s effect on first-quarter growth, rather than something more ominous. In the four quarters thereafter, the bank projects the economy will grow at a 2.5 percent rate, or even slightly higher.

In fact, the bank’s forecast for full-year 2015 is for GDP growth of 2.5 percent. That’s significant because this rate was previously identified as the minimum growth necessary to remove excess capacity from the economy.

So Canada’s economy is sustaining its upward trend, even if growth isn’t quite as robust as we’d like it to be.

Portfolio Update

Canada continues to make strides toward diversifying its export markets for the country’s resource riches. Last week, Canadian regulators approved a 25-year liquefied natural gas (LNG) export license for the Triton LNG project, which is a joint venture between Conservative Holding AltaGas Ltd (TSX: ALA, OTC: ATGFF) and Japan’s Idemitsu Kosan Co.

The National Energy Board (NEB) said the Triton Project has been approved to liquefy and ship 320 million cubic feet of LNG per day from a floating LNG facility, adjacent to a proposed liquefaction terminal to be located near either Kitimat or Prince Rupert, British Columbia. The term of the license commences on the date of first export, which would be 2017, at the earliest.

According to the National Energy Board’s website, this was the ninth such entity to receive approval for the export of LNG, with another five applications currently under review.

However, in addition to constructing the facility, AltaGas will also have to navigate British Columbia’s contentious political process, as it will need to secure additional approvals for operating in the province. For instance, the same day the NEB granted its approval to the Triton LNG project, BC’s government reversed course on a decision that would have exempted 99 percent of the natural gas produced in the province from mandatory environmental assessment.

The about-face came after BC officials suffered blowback for failing to consult First Nations groups in making the amendment. “In a stunningly stupid move, the province has effectively declared war on all BC First Nations and jeopardized all LNG discussions throughout the entire province of BC,” Chief Stewart Phillip of the Union of BC Indian Chiefs told the Canadian Press.

Our take is that such discord, whether real or the result of mere posturing, tends to raise the price tag for these types of projects, as we’ve seen with Enbridge’s (TSX: ENB, NYSE: ENB) Northern Gateway Pipeline.

AltaGas is a geographically diversified energy infrastructure company that operates in three areas: gas, power and utilities. The Gas business, which accounts for about 34.5 percent of EBITDA (earnings before interest, taxation, depreciation and amortization), gathers, processes, transports, stores and markets natural gas and natural gas liquids, touching more than 2 billion cubic feet per day of natural gas in Canada.

The Power business delivers about 27.1 percent of EBITDA and is comprised of 932 megawatts (MW) of conventional power and 440 MW (of which 277 MW are currently under construction) of renewable power, including wind, run-of-river hydro and biomass.

In the Utilities business (about 38.3 percent of EBITDA), AltaGas owns and operates utilities in Alberta, British Columbia, Nova Scotia, Michigan and Alaska that serve nearly 550,000 customers.

Management expects to achieve incremental growth from energy export opportunities in the years ahead. The company notes that it has strong relationships with First Nations groups, significant construction experience, and a track record for delivering projects on time and on budget.

To facilitate eventual LNG exports, AltaGas is also pursuing the expansion of a pipeline owned and operated by its subsidiary Pacific Northern Gas Ltd, which is the only existing natural gas pipeline that goes to Kitimat and Prince Rupert along Canada’s west coast. The proposed project involves the construction of approximately 525 kilometers of new 24-inch pipe, operating in parallel with the existing pipeline.

On Bay Street, AltaGas currently enjoys bullish sentiment with a somewhat neutral tilt, at four “buys,” three “holds” and one “sell.” However, the consensus 12-month target price is CAD45.29, which is slightly above the current share price.

Over the trailing 12 months, the stock’s share price has climbed 29.5 percent, outperforming the S&P/TSX Composite Index by 9.1 percentage points.

With a monthly payout of CAD0.1275 (CAD1.53 annualized), the stock currently yields 3.3 percent. AltaGas is a buy below USD37.25 in the Conservative Portfolio.