The month-to-month inflation surge was primarily pushed by larger prices for recreation, training, and studying (+3.4%), clothes and footwear (+1.6%), and alcoholic drinks, tobacco, and leisure hashish (+1.5%).
The top of the GST/HST break on February 15 additionally performed a key function in driving up costs, in response to Statistics Canada. The company famous that the tax break’s expiry “contributed notable upward strain to costs for eligible merchandise,” together with restaurant meals, sure retail items, and different beforehand exempted gadgets.
Weaker value progress in gasoline (+5.1% y/y, down from 8.6% in January) helped mood the general acceleration in CPI. Shelter prices (+4.2% y/y) and transportation bills (+3.0% y/y) additionally noticed slower positive factors, rising simply 0.2% and 0.3% month-over-month, respectively.
Mortgage curiosity prices rose 0.2% for the second consecutive month, slowing annual progress to 9% and marking the top of a 2.5-year stretch of double-digit will increase.
On a month-to-month foundation, the Shopper Worth Index (CPI) rose 1.1%, whereas the seasonally adjusted CPI elevated by 0.7%.
Core inflation measures intently watched by the Financial institution of Canada painted the same image. CPI excluding meals and vitality rose 2.9% year-over-year, with a seasonally adjusted month-to-month enhance of 0.5%. The BoC’s most popular measures—CPI-trim and CPI-median—additionally climbed to 2.9% y/y, marking the very best degree for CPI-median since October 2024.
“None of that is encouraging information for policymakers,” wrote BMO’s Benjamin Reitzes in a observe.
“The traits over the previous three months recommend that core inflation is about to go a bit larger within the months forward, with the three-month annualized tempo operating barely above 3% in February,” added TD Economics’ Leslie Preston.
CPI knowledge places the BoC in a “tough place”
This morning’s inflation knowledge places the Financial institution of Canada in a tricky spot because it weighs the choice to chop charges.
“Canadians’ inflation expectations have risen, however the hit to demand from uncertainty and the tariffs themselves are already weighing on [economic activity],” notes TD’s Preston. “How tariffs play out stays extremely unsure.”
BMO’s Reitzes provides that the newest knowledge will “reinforce the BoC’s cautious tone on easing to mitigate the impression of tariffs.” However, he provides, the top of the carbon tax and persevering with reversal of the GST/HST vacation may muddy the waters.
“There’s loads of noise nonetheless to come back on inflation, complicating policymakers’ job,” he wrote. “We’ll see what early April brings on the tariff entrance, but when the financial outlook doesn’t deteriorate additional, the BoC will probably be contemplating a pause after chopping at seven straight conferences.”
Preston agrees that tariff uncertainty stays a priority, noting that markets have already responded to this morning’s CPI knowledge, with Canadian bond yields rising 6 foundation factors after the CPI launch.
“On this world, we count on the Financial institution of Canada to offer some additional cushion within the type of two extra 25-basis-point price cuts at its subsequent two price bulletins,” she wrote. “Markets have lowered their odds of a reduce on April 16 barely within the wake of at present’s inflation numbers, however we are going to know much more in regards to the path of tariffs by the point the choice rolls round.”
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Final modified: March 18, 2025
