Canada Inflation Surges in March

The headline inflation rate in Canada surged to 2.4% in March of 2026 from 1.8% in the previous month, trying for the highest in one year but marginally below market expectations of 2.5%. The surge reflected the initial impact of war in the Middle East in Canadian consumer prices, as the disruption of tankers from the Persian Gulf triggered energy shortages worldwide. The consumer energy inflation swung to 3.9% from the deflation rate of 9.3% in the previous month, enough to raise transportation inflation to 3.7% (vs -0.8% in February). In turn, prices accelerated for shelter (1.7% vs 1.5%) and recreation and education (2.6% vs 0.5%). Meanwhile, base effects from the re-introduction of GST/HST taxes continued to impact food inflation, which fell to 4% from the 5.4% in February. The CPI rose 0.9% from the previous month amid a 21.2% surge in gasoline costs.

The headline inflation rate in Canada fell to 1.8% in February of 2026 from 2.3% in the previous month, slightly under market expectations of 1.9% to reflect the softest rate since July of the previous year. Price growth remained in line with the baseline expectations from the Bank of Canada that inflation would remain near the 2% mark in the near term, although the Bank's outlook and the data preceded the outbreak of war in Iran that triggered a surge in global energy prices, and those of other selected commodities. February's drop reflected base effects from the end of tax breaks in February of 2025, driving food inflation to slow to 5.3% from 7.3% last month. Prices also decelerated for recreation and education (0.5% vs 1% in January), household operations (1.2% vs 2.5%), and shelter (1.5% vs 1.7%), while transportation deflation slowed (-0.8% vs -1.7%). Meanwhile, core rates tracked by the BoC eased more than expected, with the trimmed-mean rate falling to a four-year low of 2.3%.

The headline inflation rate in Canada eased to 2.3% in January of 2026 from the three-month high of 2.4% in the previous period, slightly under market expectations that it would hold at 2.4%. The result was loosely aligned with the Bank of Canada's projection that the inflation rate would be near the 2.5% mark at the start of the year before treading below the 2% target, as base effects from the GST/HST break in January of 2025 continued to impact annual inflation rates. Deflation picked up for transportation (-17% vs -0.5% in December) due to the 16.7% plunge in gasoline prices. Inflation slowed for shelter (1.7% vs 2.1%) and household operations and furnishings (2.5% vs 3.6%). In turn, prices accelerated for food (7.3% vs 6.2%) due to breaks from the tax regimes, especially lifting prices of food from restaurants (12.3%). Meanwhile, the trimmed-mean core rate fell to 2.4% from 2.7%, well under expectations of 2.6%, for the lowest since April 2021.