Canada’s inflation rate went up slightly in March compared to February, with Statistics Canada pointing out gasoline prices are partly behind the increase.
The federal agency’s consumer price index for March 2024 saw a 2.9 per cent increase compared to the year before.
In February, that measure was at 2.8 per cent, so while March saw an increase in inflation, the situation would be different if often-volatile gasoline prices are excluded from the calculation.
According to StatsCan, without gasoline prices, inflation actually went down slightly in March.
The inflation rate for services, such as air transportation, was up by 4.5 per cent. But goods — the items consumers and businesses purchase, generally speaking — was up at a far lower rate of 1.1 per cent.
Food prices rose three per cent compared with a year ago, while prices for clothing and footwear fell 2.7 per cent. Prices for household operations, furnishings and equipment dropped 2.3 per cent.
Shelter costs contribute to ‘upward pressure’
The cost to stay sheltered in Canada pushed the consumer price index upward as well, with StatsCan noting it “continued to apply upward pressure in March,” with both the cost of mortgage interest and rent contributing the most to the difference in inflation between March 2023 and 2024.
Shelter prices went up by 6.5 per cent in March compared to the year before, which was the same rate as February. Rent was up by 8.5 per cent year over year, with mortgage interest up 25.4 per cent compared to the year before.
Mortgage interest rates have continued to show large increases in the consumer price index, as Canadians gradually renew mortgages in a higher interest rate environment than several years ago. The Bank of Canada first raised interest rates in March 2022, undertaking 10 rate hikes in less than two years to try and push back against escalating inflation.
The Bank of Canada is holding its key interest rate at 5 per cent, saying it needs to see sustained slowing of inflation before it will cut the rate. It is not ruling out a June cut.
Earlier this month, Bank of Canada governor Tiff Macklem said that cutting interest rates in June is “within the realm of possibilities,” but that the central bank needed to see a sustained slowdown in inflation before cutting rates.
