Canada CPI Inflation Rate: Data, Forecast & Trends

As of the latest available data for April 2025, Canada's headline Consumer Price Index (CPI) registered a year-on-year increase of 1.7%. This marks a notable deceleration from the 2.3% recorded in March 2025 and 2.6% in February 2025, representing the softest rise in consumer prices in seven months.

The primary catalyst for this slowdown was a significant decline in energy prices. This was largely attributed to the removal of the consumer carbon tax in most provinces during April, which magnified the impact of other factors such as increased oil output from OPEC+. However, it's important to look beyond this headline figure. When energy is excluded from the calculation, the CPI actually rose by 2.9% year-over-year in April, up from a 2.5% increase in March, signalling that underlying price pressures persist in other sectors of the economy.

A granular look at the year-on-year changes in the major components of the Canadian CPI for April 2025 reveals a diverse set of inflationary pressures and reliefs:

• Energy: This component saw the most significant decrease, falling by 12.7%. Within this, gasoline prices plummeted by 18.1%, and natural gas prices declined by 14.1%. This dramatic drop was heavily influenced by the aforementioned carbon tax removal and shifts in global oil supply.
• Food: Food inflation continued to be a concern, with prices increasing by 3.8% year-over-year. Food purchased from stores mirrored this rise at 3.8%. Notably, some grocery items saw substantial increases, such as fresh or frozen beef (+16.2%), coffee and tea (+13.4%), sugar and confectionery (+8.6%), and fresh vegetables (+3.7%). Food prices have now been increasing at a faster rate than the all-items CPI for three consecutive months.
• Shelter: Shelter costs rose by 3.4% year-over-year, remaining a significant contributor to overall inflation. While this was a slight moderation from the 3.9% seen in March, it underscores ongoing pressures in the housing market.
• Transportation: Overall transportation costs decreased by 1.9%, largely due to the fall in gasoline prices.
• Travel Tours: In contrast, prices for travel tours surged by 6.7% year-over-year in April, following a 4.7% decline in March, indicating a rebound in this sector.
• Household Operations, Furnishings, and Equipment: This category saw a modest increase of 1.1%.
• Recreation, Education, and Reading: Prices in this segment rose by 1.4%.
• Clothing and Footwear: Consumers saw some relief here, with prices declining by 0.8%.
• Health and Personal Care: This component experienced a 1.9% increase.
• Alcoholic Beverages, Tobacco Products and Recreational Cannabis: Prices for these items rose by 2.1%.
Month-On-Month Inflation Rate and Components

On a month-over-month basis, the headline CPI for Canada actually fell by 0.1% in April 2025. The seasonally adjusted figure also showed a decline, down 0.2%. This is a reversal from the increases seen in March (+0.3%) and a significant change from the 1.1% jump in February 2025.

Key monthly component changes in April 2025 highlight specific dynamics:

• Travel tour prices rose by 3.7% month-over-month, a notable swing from the 8.0% decline in March.
• Natural gas prices saw a substantial monthly decrease of 18.9%.
• Motor vehicle prices increased by 0.9% month-over-month, potentially reflecting early impacts of tariffs.
Latest Annual Inflation Rate

Canada's average inflation rate, as measured by the Consumer Price Index (CPI), saw a significant moderation in 2024, reaching an annual average of 2.4%. This was a notable decrease from the 3.9% observed in 2023, bringing it closer to the Bank of Canada's target of 2%.

The deceleration in price growth was primarily driven by a slowdown in goods inflation, which rose by only 0.3% in 2024 compared to 3.2% in the previous year. This was influenced by smaller increases in prices for non-durable goods like some food products, and even declines in durable goods prices, including passenger vehicles. Conversely, services inflation, though moderating, remained more persistent, increasing by 4.1% in 2024. Shelter costs and transportation were among the components that saw high increases. Overall, the consistent easing of inflation throughout the year reflected the impact of various factors, including lower energy prices and the effects of tight monetary policy.

Historical Inflation Data Over Time

From the mid-1990s, following the Bank of Canada's formal adoption of inflation targeting in 1991, Canada entered a prolonged period of low and predictable inflation. For much of these three decades, headline inflation successfully hovered within the Bank's 1% to 3% target range, fostering a stable macroeconomic environment. The average annual inflation rate from 1992 through 2019 was approximately 1.9%, a testament to the credibility of the central bank's framework.

This era of "The Great Moderation" was not without its fluctuations. The global financial crisis of 2008-2009, for instance, exerted significant disinflationary pressure, with CPI briefly dipping and even turning negative year-over-year in 2009. Conversely, periods of robust global commodity demand occasionally pushed inflation towards the upper end of the target band. However, these deviations were generally managed effectively through monetary policy adjustments, preventing sustained departures from the target.

The most dramatic shift occurred at the turn of the current decade. The COVID-19 pandemic and its aftermath unleashed a confluence of unprecedented supply chain disruptions, strong government fiscal support, and shifts in consumer demand. This propelled Canadian inflation to multi-decade highs, peaking at 8.1% in June 2022. This surge forced the Bank of Canada into an aggressive monetary tightening cycle.

Since that 2022 peak, inflation has demonstrated a notable, albeit sometimes uneven, decline. The annual average inflation was 6.8% in 2022, easing to 3.9% in 2023, and continued to moderate into 2024 and early 2025.

Core Inflation Rate vs Headline Inflation

While headline CPI provides an overall measure of consumer price changes, central banks and economists closely monitor core inflation measures to gauge underlying inflationary trends. Core inflation typically excludes volatile components like food and energy, which can be subject to temporary shocks. The Bank of Canada uses several preferred measures, including CPI-trim, CPI-median, and CPI-common.

In April 2025, these core measures painted a different picture than the headline figure. CPI-trim rose to 3.1% year-over-year from 2.8% in March, and CPI-median increased to 3.2% from 2.9% in March. These figures were above market expectations and, significantly, pushed these core measures above the Bank of Canada's 1% to 3% target range for the first time since June 2024. The core CPI, which excludes all food and energy, stood at 2.6% in April.

This divergence is critical: while the headline CPI was pulled down by the specific, policy-driven drop in energy prices (carbon tax removal), the acceleration in core measures suggests that underlying inflationary pressures, particularly within domestically produced services like home rents and restaurant meals, remain robust and have even intensified. This presents a more complex challenge for monetary policy.

Underlying Trends And Economic Factors Affecting Argentina Inflation
• Upside Risks:
• Sticky Services Inflation: Inflation in services, particularly shelter, could prove more persistent than anticipated due to tight supply and strong demand. If recent declines in prices for some services (like communications) reverse or if unit labour costs remain elevated, services inflation could stay high.
• Worsening Geopolitical Landscape: Escalation of conflicts or new trade disruptions could lead to renewed commodity price shocks and further supply chain constraints, pushing inflation higher.
• Tariff Impacts: The full impact of existing and potential future tariffs on consumer prices may be larger or more prolonged than currently estimated.
• Downside Risks:
• Slowing Household Spending: Higher debt servicing costs, particularly as mortgages renew at higher rates, or a weaker-than-expected labour market could lead to a sharper slowdown in household spending, thereby reducing demand-pull inflation.
• Weaker Global Activity: A significant downturn in the global economy would likely dampen demand for Canadian exports and could lead to lower commodity prices, easing inflationary pressures in Canada.

Canada Inflation Chart

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Note: This chart displays Inflation Rate (CPI, annual variation in %) for Canada from 2014 to 2024.
Source: Macrobond.

Canada Inflation Data

	2020	2021	2022	2023	2024
Inflation (CPI, ann. var. %, aop)	0.7	3.4	6.8	3.9	2.4
Inflation (CPI, ann. var. %, eop)	0.7	4.8	6.3	3.4	1.8
Inflation (Core, ann. var. %, aop)	1.2	2.8	5.6	3.5	1.8
Inflation (PPI, ann. var. %, aop)	-0.4	13.9	12.8	-1.8	0.9