Consumer price index rise & Inflation incREASE TO 2.8%

Consumer price index rise

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Note: In a CBC Interview this morning (Tuesday) they raised the question of whether interest rates will be raised at the next month’s review,

In April, the Consumer Price Index (CPI) rose by 2.8 per cent year-over-year (y/y). This was higher than March’s 2.4 per cent increase.

Gasoline prices rose by 8.9 per cent month-over-month and were 28.6 per cent higher than a year ago. Food price growth (at stores and restaurants) decelerated to 3.5 per cent following a 4.0 per cent increase in March.

Core CPI (excluding food and energy) grew by 1.5 per cent in April (y/y), down from 1.9 per cent in March. Gasoline, rent, and restaurant food were key contributors to year-over-year CPI growth.

On a seasonally adjusted basis, the CPI rose by 0.3 per cent from the previous month (following a 0.5 per cent increase in March).

The average of the Bank of Canada’s two preferred core inflation measures declined to 2.1 per cent (y/y) in April (compared to 2.3 per cent in March). CPI-median fell to 2.1 per cent (from 2.3 per cent in March), while CPI-trim declined to 2.0 per cent (down from 2.2 per cent in March).

Key insights

In April, the headline CPI continued to increase, reaching 2.8 per cent (y/y). The conflict in the Middle East and its impact on global energy markets has driven up the price of gasoline, jet fuel, and—through the pass-through of higher transportation costs—could gradually raise the prices of food and other goods. In April, gasoline was 28.6 per cent higher than a year ago. Base effects from the removal of Canada’s carbon tax have now been washed out of this figure, making year-over-year gas price growth more pronounced. These impacts were partially blunted by the federal fuel excise tax break, which will remove about 10 cents from the price of gasoline throughout most of the summer. However, core inflation measures—which gauge underlying or broader price pressures—cooled. Excluding food and gas, the CPI rose by 1.5 per cent in April—a significant deceleration from the 1.9 per cent gain in March. This highlights that the current runup in the CPI doesn’t represent generalized inflation at this point.

Oil prices remain high and will continue to keep the CPI elevated over the next several months—and potentially beyond. We expect that oil prices will decline following a resolution to the conflict in the Middle East. However, when this resolution will arrive is uncertain. Oil prices have been volatile and sensitive to any sign of progress—or faltering—in U.S.-Iran peace negotiations. The longer that trade through the Strait of Hormuz is disrupted, the higher the chance that upward pressure on Canada’s CPI will shift from being episodic to persistent. Structural damage to the global economy and upward shifts in Canadians’ inflation expectations could keep the CPI higher for longer.

Weak domestic demand remains a key downside drag on price growth. While commodity prices may remain elevated due to tighter supply conditions, weaker demand will limit some of the ability of businesses to pass on higher costs through to consumer prices. In Canada, economic growth remains hampered by U.S. tariffs and uncertainty about the future of the Canada-United States-Mexico Agreement. Weaker growth will moderate household income increases, and Canadians may be reticent to make discretionary purchases. In this context, many businesses will likely absorb a higher share of the cost increases to avoid eroding sales volumes.

For more details about the impact of the shifting geopolitical landscape and our research on Canada’s place in a changing world, please read more here (https://www.signal49.ca/trending-insights/canada-in-a-changing-world/)

Inflation rises to 2.8% in April thanks to higher gas prices: StatCan

Courtesy Barrie360.com and Canadian Press

By Craig Lord, May 19, 2026

Higher gas prices driven mainly by the war in Iran pushed the annual rate of inflation up to 2.8 per cent in April, Statistics Canada said Tuesday — the fastest pace of price hikes in almost two years.

StatCan said the cost of gasoline was 28.6 per cent higher year-over-year last month as conflict in the Middle East disrupted global oil shipments, sending costs soaring at the gas pumps. April also marked the switch to more expensive summer gasoline blends at gas stations in Canada.

The agency noted the federal government’s move to suspend the fuel excise tax mid-month helped moderate the April price increase.

StatCan’s April report marks a jump from March’s inflation rate of 2.4 per cent, though a Reuters poll of economists had expected inflation would accelerate even more to top three per cent. The April figures mark the highest annual inflation rate since May 2024.

Ottawa’s decision to remove the consumer carbon price a year earlier meanwhile skewed the annual price comparison higher in April.

Nixing the carbon price took roughly 18 cents off the price of a litre of gas in April 2025. While that move took some steam out of the headline inflation rate over the past 12 months, that reduction has now fallen out of the annual comparison — pushing inflation higher rather than depressing it.

Prices for clothing and footwear rose two per cent in April, coming off a decline of 0.4 per cent in March.

StatCan said an 11 per cent annual price drop for travel tours in April and a slowdown in rent inflation nationally helped offset rising energy costs. Rent hikes have especially eased in British Columbia as its population shrinks; StatCan noted the province was the only one that didn’t see its inflation rate accelerate in April.

CIBC senior economist Andrew Grantham said in a note to clients Tuesday that higher prices for airfares tied to spiking fuel costs were not captured in the April inflation data, because those transactions are recorded when the flight is taken — not when the ticket is purchased. He said he expects to see those pressures show up more in the summer inflation readings.

Food inflation also eased to 3.5 per cent in April, down from four per cent in March, as grocery items such as chicken, fresh vegetables, coffee and tea saw their pace of price hikes slow following sharp increases earlier in the year.

The April figures mark the Bank of Canada’s last look at inflation data before the bank makes its next interest rate decision on June 10.

The central bank has held its policy rate steady at 2.25 per cent in its last four decisions.

TD senior economist Leslie Preston said in a note that knock-on effects from the Iran war oil shock are not yet showing up in non-energy segments of the consumer basket.

The Bank of Canada’s closely watched core inflation metrics cooled more than expected in April, Preston said, offering “little argument” for rate hikes from the central bank.

Grantham said the soft core inflation readings suggest there’s slack in the Canadian economy, which will continue to keep a lid on inflation even as higher gas prices work their way through other components in the months ahead.

“Because of that, we continue to see the Bank of Canada holding interest rates steady at their current level throughout 2026,” Grantham said.