OTTAWA — Canada’s annual inflation rate eased more than expected in March, slowing to 2.3% from February’s 2.6%, driven largely by lower gasoline and travel tour prices, Statistics Canada reported Tuesday.
Despite the headline slowdown, core inflation metrics closely watched by the Bank of Canada remained elevated. The CPI-median held steady at 2.9%, while the CPI-trim edged down slightly to 2.8%.
Economists surveyed by Reuters had anticipated the annual inflation rate to remain unchanged at 2.6%, with a 0.6% monthly rise. Instead, prices rose just 0.3% on a monthly basis.
After hovering at or below 2% for seven months, consumer prices have shown signs of picking up. A temporary sales tax break from mid-December to mid-February had previously masked price increases. That impact faded in March, with food prices rising 3.2% year-over-year and alcoholic beverages up 2.4%.
These gains were offset by a 1.6% drop in gasoline prices, attributed to weaker global crude demand and economic growth concerns tied to tariffs. Excluding gasoline, the annual inflation rate stood at 2.5%.
Travel costs also declined, with travel tours down 4.7% and airfares falling 12%, reflecting a drop in Canadian travel to the U.S.
With President Donald Trump’s tariffs and Canada’s retaliatory measures weighing on growth and pushing some prices higher, the Bank of Canada faces a delicate balancing act ahead of its policy announcement on Wednesday. Markets are pricing in a roughly 60% chance that the central bank will pause its rate-cutting cycle after seven consecutive reductions.
