In April, Canada’s Inflation Rate Drops to 2.7% as Price Growth Slows Across the Economy

Statistics Canada reported on May 21 that Canada’s annual inflation rate dropped to 2.7 percent in April, with a general slowdown in price growth across various sectors.

This decline from 2.9 percent in March was primarily driven by lower food prices, services, and durable goods.

The Bank of Canada received positive news from the May 21 consumer price index report, as it has been aiming for a consistent decrease in inflation towards its two percent target.

These latest inflation numbers are anticipated to influence the central bank’s interest rate decision scheduled for June 5, as it evaluates recent economic indicators.

Grocery prices increased moderately by 1.4 percent from a year ago, while higher gasoline prices partially offset the slowdown in inflation last month, rising by 6.1 percent year-over-year.

Excluding gasoline, prices showed a 2.5 percent increase compared to a year ago. The Bank of Canada’s core inflation measures, excluding volatile prices, also slowed down last month and are now all below three percent.

The central bank has indicated a potential interest rate cut in the near future but is waiting for a sustained decrease in inflation over time.

Prior to the release on May 21, economists had differing opinions on whether the Bank of Canada would reduce rates in June or July. The latest inflation data is likely to provide more clarity as the next rate announcement approaches.

The Bank of Canada’s key interest rate currently stands at five percent, the highest level since 2001.