Canada’s inflation rate cools to 4.3% in March

Canada’s inflation rate decelerated to 4.3 per cent in March, down from 5.2 per cent the previous month and also down to the lowest level since August of 2021.

The cooling of the inflation rate was in line with what economists were expecting.

Statistics Canada reported Tuesday that food prices went up at a 9.7 per cent pace in the year up to March, and while that figure is still more than twice as high as the overall inflation rate, it is a slowdown from the 10.6 per cent pace seen the previous month.

Gasoline prices fell by 13.8 per cent in the year up to March, which is the fastest decline in the price of gas since July of 2020. But that decline comes from an abnormally high bar, as March 2022 saw pump prices spike because of the Russian invasion of Ukraine.

While the overall inflation rate decelerated, the cost of carrying a mortgage was a major factor pushing up the cost of living, as mortgage interest costs rose by 26.4 per cent in the year up to March.

“This was the largest yearly increase on record as Canadians continued to renew and initiate mortgages at higher interest rates,” the data agency said.

Royce Mendes, an economist with Desjardins, says the data will be welcome news to the Bank of Canada, which has been trying to wrestle inflation into submission by aggressively raising lending rates.

“The slowdown in the year-over-year rate was the result of base effects, with a very large monthly increase falling out of the annual calculation,” he said. “But with total prices rising yet again in March, the deceleration in headline inflation will come as cold comfort to Canadian consumers who have seen prices rise by 14 per cent in the three years since the month the pandemic began in March 2020.”