| Consensus | Consensus Range | Actual | Previous | |
| CPI - M/M | 0.7% | 0.5% to 1.0% | 0.4% | 0.9% |
| CPI - Y/Y | 3.1% | 2.9% to 3.3% | 2.8% | 2.4% |
| Core CPI - M/M | 0.1% | 0.1% | ||
| Core CPI - Y/Y | 1.5% | 1.9% |
Highlights
Inflation accelerated less than expected in April, to a monthly rate of 0.4 percent and a 12-month rate of 2.8 percent from 2.4 in March, below even the lowest expectations of 0.5 percent and 2.9 percent, respectively, in an Econoday survey. Still, the 12-month inflation rate reached its highest level since 2.9 percent in May 2024, further drifting away from the Bank of Canada's 2.0 percent target. But this does not mean the central bank will rush to tame down inflation.
First, the BoC had projected inflation to peak at 3.0 percent in April. Ehether inflation slows down from there is the question, which will continue to depend on developments in the Middle East as well as the trade negoctiations with the U.S.
Second, all three of the BoC's own measures of core inflation came down in April: to 2.0 percent from 2.2 percent for CPI-trim, to 2.1 percent from 2.3 percent for CPI-median, and to 2.5 percent from 2.6 percent for CPI-common.
Consumer prices excluding food and energy edged up 0.1 percent on the month and increased 1.5 percent from a year earlier.
While energy surged 19.2 percent year-over-year after increasing 3.9 percent in March, a decline in travel tour and a slowdown in rent growth moderated the overall inflation pace. Energy was up 5.7 percent on the month. Prices at the pump were up 8.9 percent from March and 28.6 percent year-over-year, making gasoline the largest upward contributor to both the monthly and the 12-month CPI in April. CPI excluding gasoline edged up 0.1 percent on the month and increased 2.0 percent year-over-year, matching the Bank of Canada's target and marking the lowest level since January 2025. This particular outcome might buy more time for the central bank as it continues to assess the impact of the Middle East war on growth and prices, particularly monitoring whether price hikes in energy are filtering through the rest of the economy.
Food prices contracted 0.1 percent from March and were still up 3.5 percent year-over-year.
After to gasoline, a 3.6 percent rent increase was the second main upward contributor to the 12-month CPI, although this was a deceleration from 4.2 percent in March, moderating the 12-month inflation pace. Still, since April 2021, rents have increased 30.8 percent in Canada. Overall shelter prices edged up 0.1 percent on the month, but were up 1.8 percent from a year earlier.
In addition to the rent slowdown, travel tour prices plunged 17.3 percent on the month and 11.0 percent year-over-year in April, making it the main downward contributor to both the monthly and 12-month CPI. Overall prices for recreation, education and reading were down 1.7 percent on the month, the only category to post a monthly decline outside of food, for a 12-month gain of 1.0 percent.
All eight categories recorded higher prices from April 2025.
Services prices were down 0.3 percent on the month and up 1.7 percent year-over-year and goods prices rose 1.3 percent and 4.4 percent, respectively.
Market Consensus Before Announcement
Even with a cut in the gas tax in April, gas prices are lifting CPI on month with expectations for a gain of 0.7 percent. On year, removal of the carbon tax a year ago makes for a very unfriendly comparison. That plus gas prices yields a consensus forecast of 3.1 percent.
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.