Canada’s inflation rate rose slightly in March compared to February, and Statistics Canada says higher gas prices were partly the reason.
The consumer price index for March 2024 announced by a federal government agency increased by 2.9% compared to the previous year.
In February, this indicator was 2.8%, so inflation rose in March, but the situation would be different if the frequently fluctuating gasoline prices were excluded from the calculation.
Without gas prices, inflation actually fell slightly in March, according to Statistics Canada. Economists such as Pedro Antunes say “core” inflation, which excludes some of the more volatile and irregular prices, appears to be weaker than expected.
“This is definitely good news,” said Antunes, chief economist at the Conference Board of Canada, noting that many inflation numbers are now within the Bank of Canada’s target.
The Bank of Canada has been raising interest rates since March 2022, making them 10 times in less than two years.
Bank of Canada Governor Tiff Macklem said earlier this month that a rate cut in June was “within the realm of possibility,” but the central bank needed to see a sustained slowdown in inflation before cutting rates.
The Bank of Canada has kept its key interest rate unchanged at 5%, saying it needs to see a sustained slowdown in inflation before cutting rates. The possibility of cuts in June has not been ruled out.
Shelter costs go up, but clothing costs go down.
Inflation for services such as air transport rose 4.5%. But the rise in goods, which are items typically purchased by consumers and businesses, was much lower at 1.1%.
Food prices rose 3% compared to a year ago, while clothing and footwear prices fell 2.7%. Prices of household goods, furniture and equipment fell by 2.3%.
The cost of sheltering in Canada also pushed up the consumer price index, with Statistics Canada noting that “upward pressure continued in March,” with both mortgage rates and rent contributing the most to the inflation gap in March. He pointed out that he was doing it. 2023 and 2024.
Shelter prices rose 6.5% year-on-year in March, the same rate as February. Rent increased by 8.5% compared to the previous year.
Antunes noted that rent increases may be lagging compared to home prices, which soared at the height of the pandemic.
“Housing prices have stabilized since interest rates went up, but I think in some ways rental prices are catching up with the fact that housing is so expensive for everyone these days,” Antunes said. .
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Home replacement costs, which Statistics Canada refers to as the Homeowner Replacement Cost Index, decreased in both February and March 2024 compared to the previous year. This relates to the price of new homes.
However, the cost of obtaining a mortgage, or interest rate, has increased significantly, reaching 25.4% in March 2024 compared to March 2023.
Mortgage rates continue to rise significantly above the Consumer Price Index as Canadians gradually renew their mortgages in a higher interest rate environment than a few years ago.