Canada Inflation Research Brief

Price pressures remain on downward trend. Canada’s inflation rate cooled further in February, reinforcing the broader disinflation trend underway. Headline CPI rose just 0.1 per cent monthly, while favourable base effects tied to last year’s GST holiday pushed the annual rate down 50 basis points to 1.8 per cent. Aside from a modest rise in transportation costs — mainly due to rising oil prices ahead of the escalating Middle East conflict — price pressures across most categories eased. The Bank of Canada’s preferred core measures slowed further, with the three-month annualized pace dropping to roughly 1 per cent. Although core inflation now seems on track to return to the Bank’s 2 per cent target sooner than expected, rising tensions in the Middle East present an upside risk, as higher oil prices could reintroduce energy-driven inflationary pressures in the months ahead.