Canada’s annual inflation rate eased, reflecting a slowdown in the Consumer Price Index (CPI) growth. The CPI rose 2.3% year-over-year in March, marking a decrease from February’s increase of 2.6%.
The CPI showed that gasoline prices were a key factor in this year-over-year slowdown. After rising 5.1% in February, gasoline prices fell by 1.6% in March due to the drop in crude oil prices, spurred by concerns over slowing global demand and a decrease in economic growth due to potential tariffs. Additionally, the Organization of the Petroleum Exporting Countries (OPEC) and its partners had increased oil production, further affecting prices at the pump.
Another notable decline came from the travel sector. Prices for travel tours decreased by 4.7% on a year-over-year basis, reversing the sharp 18.8% increase seen in February. Air transportation costs also fell by 12.0% compared to March 2024, largely due to a smaller-than-expected monthly increase in airfares, which had previously surged during the same period last year.
However, not all sectors experienced price relief. The reinstatement of the Goods and Services Tax (GST) and Harmonized Sales Tax (HST) in mid-February exerted upward pressure on certain goods and services, particularly in the first full month after the tax break ended. Consumers saw higher prices in March for eligible products as the taxes were reintroduced, pushing up costs across various categories.
Despite these pressures, food prices from restaurants experienced a moderate increase, rising 3.2% year-over-year in March. This was a reversal from February’s 1.4% decline, and it highlights the continuing cost challenges in the food service industry, even as other sectors showed signs of easing.
In addition to national trends, regional disparities were also evident in March’s CPI data. Nova Scotia was the only province where inflation picked up, with a 2.3% increase year-over-year, driven largely by higher shelter costs, which rose by 4.8%. Conversely, most other provinces saw a deceleration in price growth compared to February.
On a monthly basis, the CPI rose 0.3% in March, a slight increase that was largely offset by seasonal adjustments showing no significant change from the previous month.
This latest data offers a nuanced picture of Canada’s inflationary landscape. While headline inflation has slowed, underlying cost pressures in the food and shelter sectors remain the same. The impact of tax changes and fluctuating global commodity prices continues to shape the cost of living for Canadians, who are still grappling with the consequences of higher expenses, even as some relief comes in the form of lower travel and fuel costs.