Canada March CPI - Energy bounces but subdued elsewhere
Canadian CPI increased to 2.4% yr/yr in March from 1.8% in February but the increase was less steep than expected. Seasonally adjusted the monthly gain was 0.5% but with ex food and energy CPI unchanged, suggesting a subdued underlying picture.
Unadjusted CPI increased by 0.9% overall and 0.1% ex food and energy. Unadjusted gasoline surged by 21.2% leading gains of 13.1% in energy and 4.2% in transport. Seasonally adjusted the rise in transport was less extreme at 2.4%, but this is still a strong rise for one month. Energy prices are up a moderate 3.9% yr/yr but the carbon levy was still in place in March 2025. Abolition of the carbon levy in April 2026 will boost the yr/yr comparison in next month’s release.
Restraints in the seasonally adjusted data came from household operations, furnishing and equipment at -0.4% and clothing and footwear at -0.7%. Shelter was on the firm side of trend at 0.3% after two straight 0.1% declines. Travel tours and air transport both saw unadjusted gains of near 5.0% while telephone services fell by 6.1%. The unchanged monthly seasonally adjusted ex food and energy rate follows two straight gains of 0.1% leaving a soft picture in Q1.
Yr/yr growth ex food and energy fell to 1.9% from 2.0% with the yr/yr comparison restrained by the full reintroduction of the sales tax after a holiday that ran from mid-December 2024 through mid-February 2025. The ex food and energy CPI is not one of the BoC’s three core rates, which are less influenced by tax shifts. Here the picture was mixed with CPI-Common up to 2.6% from 2.4%, CPI-Median unchanged at 2.3% and CPI-Trim slipping to 2.2% from 2.3%. All three are above the BoC’s 2.0% target but today’s report should leave the BoC comfortable that underlying inflationary pressures are subdued outside the energy shock coming from the Middle East conflict.
