Canadian CPI fell 0.1 per cent month-over-month in April, bringing the headline inflation rate down to 1.7 per cent from 2.3 per cent in March. The decline, slightly less than economists expected, was driven by the removal of the consumer carbon tax at the start of the month and a sharp decline in global oil prices. Together, these factors pulled gasoline prices down more than 10 per cent month-over-month (-18.1percent year-over-year), while natural gas prices fell 18.9 per cent month-over-month (-14.1 percent year-over-year).
Despite the drop in headline inflation, the core inflation measures watched by the Bank of Canada (BoC) moved above 3 per cent in April, with the trim measure moving to 3.1 per cent and the median rising to 3.2 per cent. Food prices were a key driver, with CPI excluding food and energy rising to 2.6 per cent year-over-year from 2.4 per cent. A weaker Canadian dollar and tariffs on certain US imports have combined to push grocery prices higher – they’re now up 3.8 per cent year-over-year after starting the year below 2 per cent. Auto insurance was also up 0.9 per cent month-over-month, moving the annual rate to 7.7 per cent. Shelter costs mostly moderated, with mortgage interest costs easing slightly, while rents edged higher.
Following a weak jobs report, the BoC had a strong case for cutting rates, but the backup in core inflation has taken that option off the table. Like the Fed, the BoC now faces the challenge of balancing growth concerns with sticky inflation. While the BoC will remain cautious, a rate cut remains likely in the coming months. With a weak growth outlook for much of 2025, we continue to anticipate further rate reductions ahead.
Housing Affordability Watch
CMI monitors the latest developments and offers insights on solutions to Canada’s housing affordability crisis
As more Canadians pull back from the US real estate market, there is speculation this could spark a boost in home buying here at home. But the story isn’t that simple—and neither are the trends shaping it.
Get the full breakdown. Read our latest Housing Affordability Watch here: Will Snowbirds Revive the Canadian Housing Market? Don’t Count on It
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