The Bank of Canada has been adamant in its fight against inflation, but one economist says its efforts may be impacted by misleading consumer price index (CPI) data.

Speaking with BNN Bloomberg’s Jacqueline Hansen on Tuesday, Benjamin Tal, deputy chief economist at CIBC Capital Markets, said the record surge in mortgage interest payments due to rate hikes are driving inflation reads higher, however, the decline in mortgage principal payments is not being accounted for in this same data.

This, he argued, provides an unfair analysis of  Canada’s inflation picture to the general public.

In March, mortgage interest costs rose at the fastest pace on record, up 26.4 per cent from a year ago, while inflation slowed to 4.3 per cent on an annual basis, the latest data from Statistics Canada showed.

“It’s not fair really, because you’re counting only what’s rising (mortgage interest payments) and not what’s falling (mortgage principal payments,” he said.

This discrepancy can lead Canadians to believe that inflation is higher than it actually is while also complicating the BoC’s fight, he added.

“The headline (inflation number), is not exactly what’s happening. You have to go deeper,” Tal cautioned.

He also pointed to the rise in home loan interest payments as a sign of a cooldown rather than a cause for concern.

“You might suggest that rising interest payments is not exactly inflationary, it’s actually disinflationary -- because it’s slowing down the economy,” he added.

In this environment, he is worried the central bank may acting too aggressively in its endeavour to tame inflation as it could be fighting harder to sway consumer perception.

“I think that the risk of (the BoC) overshooting is a major risk,” he said.