Canada Inflation Research Brief

Inflation reading offers a mixed bag. The removal of the consumer carbon tax caused energy prices to fall sharply in April, pushing the headline inflation rate down 60 basis points to 1.7 per cent. Despite this, underlying price pressures continued to mount. When stripping out energy, the consumer price index rose 2.9 per cent year over year — up from a 2.5 per cent reading in March. Additionally, the Bank of Canada’s preferred measures of core inflation, CPI-trim and CPI-median, jumped 0.4 per cent month over month, causing the average three-month annualized rate to accelerate to 3.4 per cent. Motor vehicle parts were one of the main categories putting upwards pressure on core inflation, potentially due to retaliatory tariffs implemented at the start of the month. Food prices also rose by a strong 0.5 per cent monthly rate, which again could reflect trade pressures.