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yesterday

Canada's Inflation Drops to 1.7% in April, but Core Pressures Intensify

The removal of the federal carbon tax led to lower energy costs, but food prices and core inflation metrics reached multi-month highs, complicating the Bank of Canada's next rate decision.

Statistics Canada data will show the impact of removing the consumer carbon price in April inflation data released Tuesday. A woman gasses up at a gas station in Mississauga, Ont., Tuesday, February 13, 2024. THE CANADIAN PRESS/Christopher Katsarov
People shop for fruits and vegetables at a supermarket in Ottawa, Ontario, Canada , March 27, 2023. REUTERS/Patrick Doyle
People walk on Oxford Street in London, Britain, May 15, 2025. REUTERS/Maja Smiejkowska/ File Photo

Overview

  • April's headline inflation fell to 1.7%, the lowest since mid-2021, largely due to the removal of the federal carbon tax and declining global energy prices.
  • Core inflation measures, including CPI median and CPI trim, rose to 13-month highs, both exceeding 3%, signaling persistent underlying price pressures.
  • Grocery prices increased 3.8% year-over-year, with significant hikes in beef (16.2%), coffee and tea (13.4%), and fresh vegetables (3.7%).
  • Regional inflation disparities emerged, with Alberta recording the lowest rate at 1.5%, while Quebec saw no benefit from the carbon tax removal due to its cap-and-trade system.
  • The Bank of Canada faces a challenging decision on June 4, balancing temporary headline inflation relief against stubborn core inflation and evolving trade uncertainties.