- Prior was +0.5%
- CPI m/m +0.9% vs +1.1% expected
- Prior CPI m/m +0.5%
Core measures:
- BOC core 2.5% vs 2.3% prior
- BOC core m/m +0.2% vs +0.4% prior
- Core CPI 0.0% m/m +0.2% vs prior
- CPI median +2.3% vs +2.3% expected (prior was 2.3%)
- CPI trim +2.2% vs 2.3% expected (prior was 2.3%)
- CPI common 2.6% vs 2.4% prior
- Gasoline prices +5.9% vs -14.2% y/y prior
- Gasoline prices +21.2% m/m vs +3.6% m/m prior — the largest one-month increase on record
- Shelter +1.7% vs +1.5% y/y prior
Canadian inflation reaccelerated in March, with headline CPI climbing to 2.4% year-over-year from 1.8% in February. The jump was entirely an energy story, and a predictable one at that. Gasoline prices surged 21.2% on a monthly basis — the largest one-month increase on record — as the Middle East conflict sent crude sharply higher. Strip out gasoline and the picture looks very different: CPI ex-gasoline actually decelerated to 2.2% from 2.4%, pointing to underlying disinflation that remains very much intact.
The core measures are where the real story lies, and they undershot expectations across the board. CPI-trim fell to 2.2% from 2.3%, CPI-median held at 2.3%, and while CPI-common ticked up to 2.6%, the trend in the Bank of Canada’s preferred gauges is unmistakably toward target. Monthly core momentum also softened, with BOC core m/m at just +0.2% after +0.4% prior. Given the scale of the energy shock, the failure of core to blow through expectations is genuinely encouraging and suggests the pass-through from gasoline to broader prices has been limited so far.
The GST/HST base-year noise is finally behind us. March was the last month distorted by the tax holiday that ran from December 2024 to February 2025, and the unwind pulled restaurant meal inflation down to 3.2% from 7.8%. From April onward, policymakers will finally get clean year-over-year comparisons — though the removal of the consumer carbon levy in April 2025 will also fall out of the 12-month window, which will push energy readings higher again next month, though that’s counteracted by a new 10-cent per litre fuel tax holiday that starts today and runs until September.
For the Bank of Canada, this is a complicated but ultimately reassuring report. Headline will stay noisy as long as Middle East tensions persist, but the core story supports the case that inflation is converging toward 2%. The loonie should take this as mildly dovish though it’s certainly overshadowed by the Middle East today.
