Canada Inflation Research Brief

Middle East conflict pushes headline inflation higher. Canada’s annual inflation rate accelerated 40 basis points to 2.8 per cent in April, driven by a roughly 7 per cent increase in gasoline prices amid ongoing conflict in the Middle East. Even so, the reading came in below consensus expectations of 3 per cent, suggesting that broader inflationary pressures remain relatively contained. Food prices were also softer than anticipated and remained effectively unchanged on a monthly basis, helping offset some of the energy-driven gains. Outside of gasoline, inflation across several discretionary categories remained subdued, reflecting softer consumer demand and ongoing labour market weakness.