| Consensus | Consensus Range | Actual | Previous | |
|---|---|---|---|---|
| CPI - M/M | -0.1% | -0.3% to 0.5% | -0.1% | 0.3% |
| CPI - Y/Y | 1.7% | 1.5% to 2.3% | 1.7% | 2.3% |
| Core CPI - M/M | 0.5% | 0.2% | ||
| Core CPI - Y/Y | 2.6% | 2.4% |
Highlights
Canada's Consumer Price Index slowed down significantly again in April declining by 0.1 percent on a monthly basis, after experiencing a 0.3 percent uptick in March. This matched expectations in the Econoday survey of forecasters.
Compared to April 2024, the CPI is up 1.7 percent, decelerating from the 2.3 percent pace set in March, also in line with expectations in the Econoday survey of forecasters.
Excluding food and energy prices, the CPI rose 0.5 percent on a monthly basis, following a 0.2 percent increase in March. Compared to a year ago, the core CPI is up 2.6 percent in April vs. a 2.4 percent jump in March.
The average of the Bank of Canada's 'Alternative measures' of annual core inflation for April is 2.9 percent, compared to 2.7 percent in March.
The overall slowdown in headline inflation is no surprise, with the Bank of Canada predicting in its April monetary policy statement that CPI inflation will be pulled down for one year by the removal of the consumer carbon tax.
The underlying inflation data should give the Bank of Canada reason to remain on hold as it assesses the impact of the trade war on the Canadian economy.
April's slower pace was primarily due to lower energy prices, which fell 7.9 percent from March, and are down 12.7 percent on an annual basis. Gasoline prices plunged 10.2 percent from the previous month, and are down 18.1 percent compared to April 2024. Excluding energy, the CPI rose 2.9 percent year-over-year in April, following a 2.5 percent increase in March.
The tariffs/supply chain impact is in food prices, up 3.8 percent year-over-year compared with +3.2 percent in March. StatsCan said grocery store prices have been increasing at a faster rate than the all-items CPI for three consecutive months.
The main drivers of the annual acceleration in April were fresh vegetables (+3.7 percent), fresh or frozen beef (+16.2 percent), coffee and tea (+13.4 percent), sugar and confectionery (+8.6 percent) and other food preparations (+3.2 percent).
Shelter price growth continued to slow down but remains elevated rising 3.4 percent year over year, easing off a bit from March's 3.9 percent annual growth rate.
Prices for goods are down 0.5 percent from a year ago in April, after a 1.3 percent increase in March, although the cost of durable goods rose 1.7 percent. Meanwhile, service price inflation increased by 3.5 percent in April, following a 3.1 percent jump in March.
Compared to April 2024, the CPI is up 1.7 percent, decelerating from the 2.3 percent pace set in March, also in line with expectations in the Econoday survey of forecasters.
Excluding food and energy prices, the CPI rose 0.5 percent on a monthly basis, following a 0.2 percent increase in March. Compared to a year ago, the core CPI is up 2.6 percent in April vs. a 2.4 percent jump in March.
The average of the Bank of Canada's 'Alternative measures' of annual core inflation for April is 2.9 percent, compared to 2.7 percent in March.
The overall slowdown in headline inflation is no surprise, with the Bank of Canada predicting in its April monetary policy statement that CPI inflation will be pulled down for one year by the removal of the consumer carbon tax.
The underlying inflation data should give the Bank of Canada reason to remain on hold as it assesses the impact of the trade war on the Canadian economy.
April's slower pace was primarily due to lower energy prices, which fell 7.9 percent from March, and are down 12.7 percent on an annual basis. Gasoline prices plunged 10.2 percent from the previous month, and are down 18.1 percent compared to April 2024. Excluding energy, the CPI rose 2.9 percent year-over-year in April, following a 2.5 percent increase in March.
The tariffs/supply chain impact is in food prices, up 3.8 percent year-over-year compared with +3.2 percent in March. StatsCan said grocery store prices have been increasing at a faster rate than the all-items CPI for three consecutive months.
The main drivers of the annual acceleration in April were fresh vegetables (+3.7 percent), fresh or frozen beef (+16.2 percent), coffee and tea (+13.4 percent), sugar and confectionery (+8.6 percent) and other food preparations (+3.2 percent).
Shelter price growth continued to slow down but remains elevated rising 3.4 percent year over year, easing off a bit from March's 3.9 percent annual growth rate.
Prices for goods are down 0.5 percent from a year ago in April, after a 1.3 percent increase in March, although the cost of durable goods rose 1.7 percent. Meanwhile, service price inflation increased by 3.5 percent in April, following a 3.1 percent jump in March.
Market Consensus Before Announcement
Forecasters see CPI down 0.1 percent on the month and up 1.7 percent on year in April versus increases of 0.3 percent and 2.3 percent in March. The end of the consumer carbon tax in April should dampen inflation on the month.
Definition
The Consumer Price Index (CPI) is a measure of the average price level of a fixed basket of goods and services purchased by consumers. Monthly and annual changes in the CPI provide widely used measures of inflation. The policy target measure for the Bank of Canada (BoC), the annual CPI rate can be distorted by swings in the more volatile subsectors so the central bank also monitors an adjusted measure of the CPI that excludes a range of volatile categories in order to get a better handle on underlying trends.
Description
The consumer price index is the most widely followed indicator of inflation. An investor who understands how inflation influences the markets will benefit over those investors that do not understand the impact. In countries such as Canada, where monetary policy decisions rest on the central bank's inflation target, the rate of inflation directly affects all interest rates charged to business and the consumer.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
As the most important indicator of inflation the CPI is closely followed by the Bank of Canada. The Bank of Canada has an inflation target range of 1 percent to 3 percent but focuses on the 2 percent midpoint. It uses the CPI and three measures of the underlying rate as the prime inflation indicators. Markets also look at core rate which excludes food and energy.
Inflation is an increase in the overall prices of goods and services. The relationship between inflation and interest rates is the key to understanding how indicators such as the CPI influence the markets - and your investments.
Inflation (along with various risks) basically explains how interest rates are set on everything from your mortgage and auto loans to Treasury bills, notes and bonds. As the rate of inflation changes and as expectations on inflation change, the markets adjust interest rates. The effect ripples across stocks, bonds, commodities, and your portfolio, often in a dramatic fashion.
By tracking inflation, whether high or low, rising or falling, investors can anticipate how different types of investments will perform. Over the long run, the bond market will rally (fall) when increases in the CPI are small (large). The equity market rallies with the bond market because low inflation promises low interest rates and is good for profits.
As the most important indicator of inflation the CPI is closely followed by the Bank of Canada. The Bank of Canada has an inflation target range of 1 percent to 3 percent but focuses on the 2 percent midpoint. It uses the CPI and three measures of the underlying rate as the prime inflation indicators. Markets also look at core rate which excludes food and energy.
