StatCan Reports Canada’s Inflation Dropped to 2.3% in March

OTTAWA—Canada’s annual inflation in March unexpectedly decreased to 2.3 percent, three notches lower than the previous month, largely due to lower gasoline and travel tour prices, data revealed on Tuesday.

However, Statistics Canada pointed out that the core measures of inflation, closely monitored by the Bank of Canada, remained elevated.

Statscan stated that on a month-on-month basis, inflation increased by 0.3 percent.

Analysts surveyed by Reuters had anticipated the year-on-year inflation rate to remain at 2.6 percent and for the monthly basis to rise by 0.6 percent.

The increase in consumer prices in Canada has shown signs of acceleration after seven months of remaining at or below 2 percent.

A temporary tax break from mid-December to mid-February obscured the actual price hikes, particularly visible in the increase in food and alcoholic beverage prices, which reversed their previous decline and surged in March.

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Food prices rose by 3.2 percent and alcoholic beverages increased by 2.4 percent annually.

However, a decline of 1.6 percent in gasoline prices largely offset this increase. Excluding gasoline, the consumer price index climbed by 2.5 percent in March, according to Statscan.

Statscan explained, “The decrease was mainly attributable to lower crude oil prices due to concerns about slowing global oil demand and economic growth related to tariff threats.”

Year over year, travel tour prices dropped by 4.7 percent in March and air transportation prices fell by 12.0 percent. The decrease in air travel coincided with reduced Canadian air travel to the United States, as per Statscan.

President Donald Trump’s tariffs on various Canadian imports and Canada’s retaliatory actions are anticipated to raise prices but also hinder economic growth, leaving the central bank struggling with whether to cut or increase rates.

The Bank of Canada is scheduled to announce its monetary policy decision on Wednesday. Currency markets predict a 60 percent chance of a pause after seven consecutive rate cuts by the bank.

The Canadian dollar was trading down by 0.28 percent at 1.3911 to the U.S. dollar, or 71.89 U.S. cents. Yields on two-year government bonds decreased by 4.2 basis points to 2.537 percent.

One of the core measures—CPI-median, or the central component of the CPI basket when arranged by increasing prices—remained at 2.9 percent in March, consistent with the previous month.

The other core measure, CPI-trim, which excludes extreme price changes, slightly slowed to 2.8 percent, as reported by Statscan.