Statistics Canada announced on April 16 that the Consumer Price Index (CPI) for March increased by 2.9% compared to the same month last year, exceeding February’s 2.8%. Rising gasoline prices and housing-related prices had a major impact.
Gasoline prices rose significantly from 0.8% in February to 4.5% in March. Regarding housing-related prices, the mortgage interest rate and rent index had the greatest impact on the year-on-year increase in all items CPI. In March, sales rose 6.5% compared to the same month last year, the same rate as February. Mortgage interest rates increased by 25.4% in March, following February’s 26.3%. Rent rose 8.5% in March, following 8.2% in February. Prices for food items rose by 3% in March, although the rate of increase was subdued at one point. Last month it was 3.3%.
The Bank of Canada announced on April 10 that it would keep the overnight interest rate unchanged at 5%. The statement said, “The CPI inflation rate slowed to 2.8% in February, with upward price pressures easing across goods and services. However, housing price inflation has slowed, driven by rising rents and mortgage rates.
Core inflation has slowed to just over 3% in February from around 3.5%, suggesting a downward trend for the first half of the year. “We expect inflation to remain around the same level, remain below 2.5% in the second half, and reach our 2% inflation target in 2025.” He also explained that he would closely monitor whether the downward trend in the inflation rate continues. Some predict that depending on the inflation rate in April, there may be a reduction in interest rates in the next announcement in June.