Inflation rate drops to 1.7% in April, driven by lower energy prices after carbon tax removal

Jenna Benchetrit · CBC News

· Posted: May 20, 2025 8:35 AM EDT | Last Updated: 1 hr ago

Canada's ostentation complaint eased to 1.7 per cent successful April, driven by a driblet successful prices after the national authorities removed the user c tax, according to Statistics Canada.

The slowdown came aft the ostentation complaint deed 2.3 per cent successful March. Lower crude lipid prices were besides a origin successful the decline, the information bureau said. 

Despite the diminution successful header inflation, core ostentation measures each roseate successful April, immoderate supra three per cent — good supra the Bank of Canada's 2 per cent people rate.

The cardinal slope watches those numbers intimately due to the fact that they portion retired volatile sectors and don't origin successful one-offs similar the removal of the c tax.

"The large alleviation from little gasoline prices successful April masked an unfriendly ostentation representation beneath the surface. Some of that upswing successful underlying prices appears related to the simmering commercialized war," BMO main economist Douglas Porter wrote, noting a flare-up successful the outgo of groceries and autos.

"After a anemic jobs study handed the Bank a bully crushed to cut, this back-up successful halfway supra 3 [per cent] pretty overmuch washes that away," Porter wrote.

The cardinal slope is acceptable to marque its adjacent involvement complaint determination connected June 4. Porter inactive expects that the Bank of Canada volition cut, fixed the outlook for anemic economical maturation successful 2025, but said the bank might request much clip to spot how inflation plays out.

Pump and structure prices down, market prices up

As the divisive c taxation ended, gasoline prices took a nosedive, dropping 18.1 per cent successful April compared to a twelvemonth earlier. Natural state prices fell 14.1 per cent during the aforesaid period, StatsCan noted.

Tu Nguyen, an economist astatine RSM Canada, wrote that structure besides enactment immoderate downward unit on inflation past month.

"Slowing request owed to stricter migration policies person led structure ostentation to descent to 3.4 [per cent], the lowest since 2021," Nguyen wrote.

"Shelter prices are expected to stay chill successful the adjacent fewer months arsenic involvement rates enactment debased and the lodging marketplace becomes much balanced."

Even arsenic consumers paid little astatine the pump and lodging ostentation simmered down, groceries were much costly successful April, increasing 3.8 per cent year-over-year compared to 3.2 per cent successful March. Grocery ostentation has present outpaced wide ostentation for 3 months successful a row.

Fresh veggies, caller and frozen beef, java and tea, positive sweetener and different sweets contributed the astir to the emergence successful store-bought nutrient prices — and edifice meals besides got much costly past month, the information bureau said.

"The large bump successful halfway [inflation] was driven heavy by nutrient prices, which person been moving blistery connected a seasonally adjusted ground successful the past 3 months," Porter wrote.

"A anemic loonie astatine the commencement of the year, and tariffs connected immoderate U.S. imports person combined to thrust market prices northward."