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Canada’s Inflation Rate Rises To 6.7% In March, Highest Since January 1991

In March, Canadian consumer prices increased 6.7% year over year, one percentage point higher than the gain in February (+5.7%). This was the largest increase since January 1991 (+6.9%).

Inflationary pressure remained widespread in March, as prices rose across all eight major components. Prices increased against the backdrop of sustained price pressure in Canadian housing markets, substantial supply constraints and geopolitical conflict, which has affected energy, commodity, and agriculture markets. Further, employment continued to strengthen in March, as the unemployment rate fell to a record low. In March, average hourly wages for employees rose 3.4% on a year-over-year basis.

Excluding gasoline, the Consumer Price Index (CPI) rose 5.5% year over year in March, the fastest pace since the introduction of the all-items excluding gasoline special aggregate in 1999, following a 4.7% gain in February.

On a monthly basis, the CPI rose 1.4% in March, following a 1.0% gain in February. This was the largest increase since January 1991, when the goods and services tax was introduced. On a seasonally adjusted monthly basis, the CPI rose 0.9% in March, matching the largest increase on record.

Chart 1 
12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline

Chart 1: 12-month change in the Consumer Price Index (CPI) and CPI excluding gasoline

Chart 2 
Prices rise in all major components

Chart 2: Prices rise in all major components

Higher prices for gasoline and fuel oil and other fuels

In March, gasoline prices rose 11.8% month over month, following a 6.9% increase in February. Global oil prices rose sharply in March because of supply uncertainty following Russia’s invasion of Ukraine. Higher crude oil prices pushed prices at the pump higher. Year over year, consumers paid 39.8% more for gasoline in March.

Month over month, prices for fuel oil and other fuels rose 19.9%, the second largest increase on record after February 2000. On a year-over-year basis, prices for fuel oil and other fuels rose 61.0% in March.

Chart 3 
Prices for gasoline and fuel oil and other fuels increase

Chart 3: Prices for gasoline and fuel oil and other fuels increase

Prices for durable goods rise at a faster rate, led by passenger vehicles and furniture

In March, prices for durable goods increased 7.3% compared with the same month a year earlier, following a 4.8% gain in February. This was the largest increase since February 1982.

Prices for passenger vehicles rose 7.0% year over year, after increasing 4.7% in February. This movement is partly attributable to the higher availability of new 2022-model-year vehicles. An ongoing global shortage of semiconductors, a key input in vehicle assembly, continued to factor into higher prices.

Consumers paid higher prices to furnish their living spaces in March, as furniture prices rose 13.7% on a year-over-year basis. Supply chain issues and higher input and shipping prices contributed to the increase.

Prices for groceries continue to increase

Shoppers paid 8.7% more for food purchased from stores on a year-over-year basis in March, up from a 7.4% increase in February. This is the largest yearly increase since March 2009. Increases in input prices and transportation costs continued to put upward pressure on grocery prices.

Prices for dairy products and eggs rose 8.5% year over year in March, following a 6.9% increase in February. This is the largest yearly increase since February 1983. Price growth for butter (+16.0%), cheese (+10.4%) and fresh milk (+7.7%) contributed to the gain. The Canadian Dairy Commission implemented changes in February 2022, which put upward pressure on dairy products and butter prices.

Prices for pasta products were up 17.8% on a year-over-year basis in March, the largest increase since January 2009. Similarly, breakfast cereal and other cereal products (excluding baby food) increased 12.3% year over year, the fastest pace of price growth since June 1990. The increases occurred as prices for wheat futures reached a 14-year high in the context of the conflict between Russia and Ukraine, two major wheat exporters. Prices for fertilizer, a key input in wheat production, were elevated prior to the conflict in Eastern Europe, due, in part, to higher energy prices.

Chart 4 
Prices for food purchased from stores and restaurants rise

Chart 4: Prices for food purchased from stores and restaurants rise

Canadians pay more for dining out, hotel rooms, and flights

In March, prices for services rose 4.3% on a year-over-year basis, up from a 3.8% increase in February, as public health measures across Canada continued to ease. Higher prices for high-contact services contributed to the increase.

Canadians paid more to dine out, as prices for food purchased from restaurants (+5.4%) rose at a faster pace year over year in March than in February (+4.7%).

Prices for traveller accommodation rose 24.4% in March compared with the same month a year earlier amid higher demand for travel, especially during the March break.

Month over month, traveller accommodation prices increased 3.7%, the fastest March increase on record, as Canadians attended in-person sporting events, concerts, and conventions in major cities.

Air transportation prices rose 8.3% month over month in March. Strong demand for domestic travel and trips to the United States during the March break contributed to higher prices this month.

Regional highlights

On a year-over-year basis, the CPI increased at a faster pace in March than in February in every province. Prices rose across a broad range of consumer goods and services in the provinces.

Price growth was most pronounced in Prince Edward Island (+8.9%), followed by New Brunswick (+7.4%), Manitoba (+7.4%) and Ontario (+7.0%). The gains in the two Atlantic provinces were led by fuel oil and other fuels, used more commonly in the region for home heating, as well as gasoline. The gains in Manitoba and Ontario were led by gasoline.

Chart 5 
The Consumer Price Index rises at a faster pace in all provinces

Chart 5: The Consumer Price Index rises at a faster pace in all provinces

Passenger vehicle registration fees eliminated in Ontario

In March, the passenger vehicle registration fees index fell 100.0% year over year in Ontario, as the provincial government eliminated these fees.

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