Canada Inflation Research Brief

March inflation reading better than headline metric suggests. Canada’s consumer price index rose 2.9 per cent year-over-year in March, up from a 2.8 per cent gain in February. This inflation uptick matched market expectations, with gasoline prices contributing the most to the year-over-year headline acceleration. Despite the increase in annual price growth seen in March, underlying measures were more favourable. The Bank of Canada’s preferred readings of core inflation continued to trend down for the third consecutive month, which beat the market consensus. CPI-trim slowed to 3.1 per cent from 3.2 per cent in February, while CPI-median decreased to 2.8 per cent from 3.0 per cent. This pulled the average annual rate down to 2.9 per cent, which was the first time since June 2021 that it was within the BoC’s target range. The three-month annualized rate also showed further easing, dropping to just 1.3 per cent.