The consumer price index (CPI) rose 2.3% year-on-year in March, following a 2.6% increase in February. The annual slowdown in the consumer price index for all commodities was attributed to lower tour and gasoline prices in March. Excluding gasoline, the consumer price index rose 2.5% after an increase of 2.6% (excluding gasoline) in February.
The slowdown was mitigated by the end of the temporary GST/HST exemption on February 15, putting upward pressure on prices of eligible products in March compared to February.
On a monthly basis, the consumer price index rose 0.3% in March. On a seasonally adjusted monthly basis, the CPI remained unchanged.
Consumers pay less for tours and airline tickets
On a year-on-year basis, tour prices fell 4.7% in March after an increase of 18.8% in February. On a monthly basis, tour prices fell by 8.0% in March, following a notable increase in February (+23.2%) over the US Presidents Day weekend.
Air transport prices fell 12.0% year-on-year in March, following a 4.4% decline in February. This was due to a smaller monthly increase in March 2025 (+1.2%) compared to the monthly increase in March 2024 (+10.0%), coinciding with a decrease in Canadian air travel to the United States.
Gasoline prices fell year-on-year
On an annualized basis, consumers paid 1.6% lower in fuel prices in March, following a 5.1% increase in February. The decline was mainly due to lower crude oil prices, amid fears of slowing global oil demand and slowing economic growth linked to the threat of tariffs. In addition, the Organization of the Petroleum Exporting Countries (OPEC) and its partners (OPEC+) confirmed a planned increase in production.
Recent trends in Canada’s annual CPI
Recent trends in the Canadian CPI data year-on-year reflect ongoing changes in inflation dynamics. Here are some key points:
Inflation levels: The consumer price index showed volatile inflation rates over the past year. After a period of high inflation driven by factors such as supply chain disruptions and rising energy prices, recent data points to moderate inflation.
CPI trends: The core CPI, which excludes volatile items such as food and energy, was a critical indicator. Recent trends suggest that while core inflation remains above historical benchmarks, it has been gradually declining, reflecting a slowdown in price pressures in various sectors.
Impact of monetary policy: The Federal Reserve’s monetary policy, including interest rate hikes and quantitative tightening, has affected inflation trends. Recent CPI data is closely monitored for clues on how effective these policies are in controlling inflation.
Stock Markets: Inflation data can affect stock markets as well. Rising inflation may increase production costs for companies, which can affect profit margins. Investors may adjust their portfolios based on inflation expectations and their impact on corporate earnings.
Sector-specific trends: Different sectors experienced varying inflation pressures. For example, energy prices have shown more volatility, while some sectors such as housing have seen more stable or even declining price trends.
Economic uncertainty: Factors such as geopolitical events, changes in consumer behavior, and global economic conditions continue to influence CPI trends. Recent data reflect the impact of these uncertainties on inflation.
Overall, while year-on-year CPI data indicates a decline from the maximum inflation rates seen earlier, inflation remains a key area of focus by policymakers and analysts.
Factors Influencing Canada’s Annual CPI Trends
There are many factors that can influence Canadian CPI trends. Here are some of the key factors that have influenced recent trends in Canada’s CPI:
Supply chain disruptions: Disturbances in global supply chains, caused by factors such as the COVID-19 pandemic, shipping delays, and production bottlenecks, can lead to shortages of goods and components. This can lead to price increases for certain products, affecting the CPI.
Energy prices: Energy price fluctuations, especially oil and gas, can have a significant impact on the CPI. High energy prices can lead to higher transportation costs and higher prices for goods and services, contributing to inflation.
Labor market dynamics: Labor market tightness, wage growth, and changes in employment levels can affect patterns of consumer spending and overall demand for goods and services. Strong wage growth could lead to increased consumer spending, contributing to inflation.
Consumer demand: Changes in consumer preferences, spending habits, and general consumer demand can affect the prices of various goods and services. Strong demand for certain products can lead to price increases, affecting the CPI.
Global Economic Conditions: Developments in the global economy, including trade dynamics, currency fluctuations and geopolitical events, can affect the prices of imported goods and commodities, affecting the consumer price index.
Inflation expectations: Consumer and business expectations about future inflation can affect current price-setting behavior. Expectations of higher inflation may lead to price adjustments, affecting the CPI.
By observing these factors and their impact on the CPI, policymakers, economists, and investors can gain insights into inflation trends and make informed decisions about monetary policy, investments, and financial planning.
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