Canadian Inflation (March 2026)

Canadian prices, as measured by the Consumer Price Index (CPI), rose 2.4 per cent on a year-over-year basis in March, following a 1.8 per cent increase in February. On a seasonally adjusted monthly basis, the CPI was up 0.5 per cent in March, equivalent to a 5.9 per cent increase on an annualized basis. The CPI ex-gasoline increased by 2.2 per cent in March, down from 2.4 per cent in the previous month. Additionally, food prices overall increased by 4 per cent year-over-year, down from 5.4 per cent in February. In BC, consumer prices rose 2.5 per cent year-over-year in March, up about 0.8 points from February. The Bank of Canada's preferred measures of median and trimmed inflation, which strip out volatile components, rose by 2.3 per cent and 2.2 per cent year-over-year, respectively. 
 
A sizeable uptick in headline inflation was largely driven by higher gasoline prices as a result of the oil price shock arising from the Middle Eastern conflict. However, 3-month annualized core inflation, while rising by roughly 0.5 points month-over-month, remains at about 1.65 per cent, below the Bank of Canada’s 2 per cent target. Unfortunately, the economy continues to face double-sided risks, as growth and employment have weakened while inflationary pressures loom. Looking ahead, we expect a fourth consecutive rate hold from the Bank next week, as they continue monitoring the scale and duration of rising oil prices amidst tumultuous negotiations from both sides. Ultimately, the Bank’s guidance during its April meeting should provide its perception of the oil shock, thus anchoring expectations for monetary policy through the next few months.