• The consumer price index accelerated to 1.9% year-on-year (from 1.5% in February) on par with the consensus forecast as the drag from past declines in energy prices diminished. Year-on-year, energy prices were down 1.2%, but this was up from -5.7% in February.
  • Food price inflation accelerated to 3.6% in March from 3.2% in February.
  • More broadly, goods price inflation accelerated to 1.5% (from 0.6% y/y), but service price growth edged modestly lower (to 2.2% from 2.3% in February).
  • On a seasonally-adjusted basis, prices were up 0.2% month-on-month. Gains were relatively broad-based with only household operations (-0.2%) and clothing and footwear (-0.4%) pulling back.
  • Two of three core inflation measures edged higher in the month. CPI-median moved to 2.0% (from 1.9%) and CPI-trim hit 2.1% (from 2.0%). The CPI-common measure was unchanged at 1.8%. On average, the three core measures are at 2.0%.

Key Implications

  • Inflation made a bit of a comeback in March, but mostly as past declines in prices dropped out of the year-on-year calculation. Still, it was enough to push the average of core measures to the 2.0% mark.
  • A softer Canadian dollar relative to its year-ago level tends to show up in higher goods prices, and some of this pass through came through in March’s reading. Assuming a relatively stable loonie going forward, this impact will not last.
  • With the Canadian economy going through a soft spot, this data will have little impact on the Bank of Canada’s decision making. Indeed, the weakness in the international trade data (also released today) augurs for continued caution from the central bank.


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