Canadian Inflation Report: April 2025 Insights

In April 2025, Canadian inflation, as measured by the Consumer Price Index (CPI), slowed to a year-over-year increase of 1.7 percent, down from 2.3 percent in March. On a seasonally adjusted month-over-month basis, the CPI dipped by 0.2 percent. The primary driver of this slowdown in headline CPI was a decline in energy prices, largely due to the removal of the consumer carbon tax. Excluding energy, the CPI rose by 2.9 percent year-over-year in April.

Despite the overall deceleration, certain sectors continue to exert upward pressure on prices. Shelter costs remain the dominant force behind inflation, while grocery prices have also surged, growing at 3.8 percent year-over-year in April—outpacing the headline CPI over the past three months. In British Columbia, consumer prices increased by 2.0 percent year-over-year, a decrease from 2.6 percent in March.

The Bank of Canada’s preferred core inflation measures—median and trimmed inflation, which exclude volatile components—stood at 3.2 percent and 3.1 percent year-over-year, respectively. These figures, above the Bank’s target range, indicate that the slowdown in headline CPI is primarily driven by volatile components like energy, while underlying inflationary pressures persist across other sub-components.

This mixed inflation report places the Bank of Canada at a crossroads: it must decide whether to prioritize a potential rate cut to stimulate the economy or maintain the current policy rate to curb persistent price growth. As inflationary pressures beyond energy and gasoline remain evident, the upcoming GDP report next week will be crucial, particularly in revealing the early impacts of tariffs on the Canadian economy. Stakeholders will be watching closely to see how these dynamics unfold.