Canada Inflation Research Brief

Annual price growth shows encouraging signs. Canada’s Consumer Price Index rose 4.3 per cent year-over-year in March, the smallest annual increase since August 2021 and down from the 5.2 per cent witnessed in February. While base effects helped pull price growth down sharply in March, there were still positive indicators from the recent data release. The average three-month annualized gain in CPI-trim and CPI-median, Canada’s main measures of core inflation, fell to a 16-month low of 3.4 per cent. Although still elevated, food inflation also continued to cool, sitting at 9.7 per cent — the lowest in eight months. As a result, headline inflation may fall faster than the Bank of Canada expects and approach the target range of 1 to 3 per cent in the latter part of this year as broad-based indicators continue to suggest further price easing.