Canada Inflation Rate Undershoots Expectations

The headline inflation rate in Canada rose to 2.8% in April of 2026 from 2.4% in the previous month, the highest in two years, albeit firmly under the market consensus of 3.1%. The increase extended the jump from the previous month as the disruption of energy supply from the Middle East, due to the war in the region, raised prices of fuel and power. Transportation inflation surged to 7.6% from 3.7% in March amid 19.2% surge in energy prices (vs 3.9% in March). In turn, prices for core sectors of the economy grew at a more moderate pace, aligned with the Bank of Canada's note that it did not see higher energy prices spread into inflation expectations so far. The trimmed-mean and median core inflation rates followed by the BoC fell to 2% and 2.1%, respectively, below market expectations to their lowest in five years. Food inflation eased to 3.5% from 4%, and shelter inflation inched marginally higher to 1.8% vs 1.7%.

The headline inflation rate in Canada surged to 2.4% in March of 2026 from 1.8% in the previous month, tying 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%.