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Canada Inflation March 2024

Canada: Inflation rises in March but remains within the Central Bank’s target range

Inflation ticked up to 2.9% in March from February’s 2.8%, in line with market expectations and staying within the Central Bank’s 1.0%–3.0% target range. March’s reading was the highest inflation rate since December 2023. The increase was largely due to rising price pressures for housing and transport.

Annual average inflation fell to 3.3% in March (February: 3.4%). Meanwhile, core inflation edged down to 2.0% in March, from the previous month’s 2.1%.

Lastly, consumer prices rose 0.63% in March over the previous month, picking up from the 0.32% increase recorded in February.

Regarding the implications for monetary policy, Goldman Sachs analysts said:

“[The March inflation] report confirmed that underlying inflationary pressures are moderating. We continue to expect that the inflation and wage data flow will remain benign in the next couple of months and maintain our forecast for a first BoC cut in June and for a total of 100bp of easing by the end of 2024.”

In contrast, EIU analysts were slightly more hawkish:

“We are unwilling to shift our call for a first rate cut in July forwards to June. We note that inflation is on the right path, but also acknowledge that inflation in rents remains well above target and that a recent rise in global oil prices will be likely to push up inflation in the energy and transport categories.”

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