Canada Inflation March 2018


Canada: Inflation hits over three-year high in March

April 20, 2018

Seasonally-adjusted consumer prices rose 0.1% from a month earlier in March, easing from February’s 0.2% increase. According to Statistics Canada, the slowdown was driven by lower food prices, as well as lower prices for clothing and footwear, household operations, furnishings and equipment. On the other hand, transportation costs—driven by fuel prices—climbed in the month.

Inflation rose to 2.3% from 2.2% in February, the strongest print in three and a half years. March’s uptick, which came in just below market expectations of a 2.4% rise, was nearly broad-based across components but was largely due to the acceleration in fuel prices from a year ago. Meanwhile, annual average inflation was stable from a month earlier at 1.6%. Core inflation, which excludes volatile items including fuel and fresh produce, ticked down to 1.4% (February: 1.5%).

On the heels of the Bank of Canada’s 18 April monetary policy meeting in which the target for the overnight rate was left unchanged at 1.25%, March’s strong inflation reading will likely press officials to consider hiking rates at their next meeting in May—as long as incoming economic data firms up. A number of FocusEconomics panelists currently expect a rate hike in the second quarter.

In its April monetary policy report, the Bank of Canada forecast inflation averaging 2.3% in 2018 and 2.1% in 2019. FocusEconomics Consensus Forecast panelists see inflation averaging 2.1% in 2018, which is unchanged from last month’s forecast. For 2019, our panelists see inflation averaging 2.0%.


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Canada Inflation Chart

Canada Inflation March 2018

Note: Year-on-year and month-on-month variation of seasonally-adjusted consumer price index in %.
Source: Statistics Canada (SC).

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