The Canadian inflation rate ticked slightly higher in March, fueled by rising gasoline prices.
Statistics Canada’s consumer price index (CPI) was up 2.9% in March compared to a year earlier, versus a 2.8% rise in February. The increase was in line with expectations and may keep the Bank of Canada on track for a possible interest rate cut in June.
Thanks to higher crude oil, gasoline prices increased 4.5% year-over-year, easily outpacing the 0.8% rise in February. Excluding gasoline, the all-items CPI slowed to a 2.8% gain in March, down from a 2.9% increase in February.
“Higher global prices for crude oil stemmed from supply concerns amid geopolitical conflict and continued voluntary production cuts, leading to higher prices at the pump,” StatsCan said.
Overall food prices were up 3% annually in March, with the cost of food purchased from grocery stores up a relatively modest 1.9%. That represents a major decline from September 2022, when food (purchased from stores) inflation peaked at 11.4%.
Meat prices were up 3.4% in March, while bakery products increased 1.3%, and fresh vegetables 2.5%. On the other hand, fresh fruit prices declined 2.5%.
Shelter prices increased 6.5% year over year in March, rising at the same rate as in February. The mortgage interest cost index rose 25.4% on a year-over-year basis in March, following a 26.3% increase in February.
Rent prices continued to climb in March, rising 8.5% year over year, following an 8.2% increase in February.
The Bank of Canada left its key overnight lending rate steady at 5% for the sixth consectuive time in an announcement last week. However, Governor Tiff Macklem told reporters that a rate cut in June was within the “realm of possibilities.”
The Bank said it expects headline inflation to be close to 3% during the first half of this year, move below 2½% in the second half, and reach the 2% inflation target in 2025.
