Tuesday, April 15, 2025
Year : 2, Issue: 33
Reuters: Canada’s annual inflation surprisingly slowed in March to 2.3 percent, three notches below the prior month, largely helped by lower gasoline and travel tour prices, data showed on Tuesday.
The lower than expected number on inflation slightly increased the chances of a rate cut on Wednesday, although the majority in the market still tilted towards a pause as economists were divided on the course for monetary policy.
The core measures of inflation, which are closely tracked by the Bank of Canada and strip off volatile items, however, stayed elevated, Statistics Canada said.
“Does (the bank) look in the rear view mirror at still relatively sticky core inflation, or does it look forward knowing that the consumer and business sentiment has crumbled and the economy is likely to weaken in this quarter? That’s a tough call,” said Doug Porter, chief economist at BMO Capital Markets.
The BoC will announce its monetary policy decision on Wednesday and currency markets have trimmed their bets for a pause in its interest rate cutting cycle to around 52 percent from 60 percent before the data was released.
On a month-on-month basis, inflation rose by 0.3 percent, Statscan said.
Analysts polled by Reuters had expected the year-on-year inflation rate to remain at 2.6 percent, and on a monthly basis to rise by 0.6 percent.
The rate of increase of consumer prices in Canada has shown signs of acceleration after seven months of staying at a level of 2 percent or below.
Food prices rose by 3.2 percent and alcoholic beverages increased by 2.4 percent on an annual basis.
But this increase was largely offset by a deceleration of 1.6 percent in the price of gasoline. Without gasoline, the consumer price index rose by 2.5 percent in March, Statscan said.
The Canadian dollar CAD= was trading down 0.28 percent at 1.3911 to the US dollar, or 71.89 US cents. Yields on two-year government bonds CA2YT=RR dropped 4.2 basis points to 2.537 percent.
One of the core measures of inflation, CPI-median – or the centermost component of the CPI basket when arranged in an order of increasing prices – was at 2.9 percent in March, same as the prior month.
The other core measure CPI-trim, which excludes the most extreme price changes, slowed a tad to 2.8 percent, Statscan said.
