The Canadian inflation rate declined in March compared to a month earlier, partially driven by lower gasoline prices.
Statistics Canada’s consumer price index on Tuesday showed Canada’s annual rate of inflation slowed to 2.3% last month, down from the 2.6% advance in February.
The decline in the March inflation rate caught analysts and economists by surprise, with most expecting a higher inflation rate of 2.5% to 2.7%.
Consumers paid 1.6% less at the pump year-over-year in March following a 5.1% increase in February, StatsCan said. The decline was largely a result of lower crude oil prices amid concerns of slowing global oil demand and slowing economic growth related to the threat of tariffs. Additionally, the Organization of the Petroleum Exporting Countries and its partners (OPEC+) confirmed a planned increase in output, the federal agency said.
Lower travel costs also helped to temper the March inflation rate, as air transportation prices fell 12% year-over-year, following a 4.4% decline in February.
With the Bank of Canada set to make an interest rate announcement tomorrow, market sentiment is almost evenly split on whether the Bank will pause its rate-cutting campaign or push forward with another 25-point basis reduction. The Bank lowered its key interest rate by 25 basis points to 2.75% last month, marking its seventh consecutive rate cut since mid-2024.
