Canada’s annual inflation rate eased to 1.7% in April from 2.3% in March, driven by a 12.7% drop in energy prices following the repeal of the federal consumer carbon tax, Statistics Canada said on Tuesday.
However, two of the three main measures of core inflation that the Bank of Canada focuses on jumped to 13-month highs, reflecting rising underlying price pressures.
Analysts had previously forecast the annual rate would ease to 1.6%, while the Bank of Canada last month expected the rate to hit around 1.5%, driven by the repeal of the carbon tax and lower crude oil prices.
Gasoline prices fell 18.1% year-on-year, while natural gas prices fell 14.1% compared with April 2024. However, consumers still paid 3.8% more for groceries, up from 3.2% in March. Prices for travel packages also jumped 6.7% year-on-year.
On a monthly basis, inflation fell 0.1%, slightly better than expectations for a 0.2% decline.
The data was the second-to-last major release before the Bank of Canada announces its next interest rate on June 4, with first-quarter GDP figures due on May 30.
After seven consecutive rate cuts since June, the central bank left interest rates on hold on April 16, signaling its readiness to act decisively if necessary to curb inflation.
The central bank is focusing on its core inflation measure, which filters out the prices of more volatile goods and does not take into account the repeal of the carbon tax.
The median CPI index, which measures the median inflation rate across CPI components, rose from 2.8% to 3.2%, the highest since March 2024. The trim CPI, which excludes extreme values, also rose from 2.9% to 3.1%.
