Canada’s inflation rate eased to 1.7 per cent in April, driven by a drop in prices after the federal government removed the consumer carbon tax, according to Statistics Canada.
The slowdown came after the inflation rate hit 2.3 per cent in March. Lower crude oil prices were also a factor in the decline, the data agency said.
Despite the decline in headline inflation, core inflation measures all rose in April. The Bank of Canada watches those numbers closely because they strip out volatile sectors and don’t factor in one-offs like the removal of the carbon tax.
“Signs of renewed weakening in the economy on one hand, as shown by the latest employment data, but stronger core inflation on the other makes for a tough decision for the Bank of Canada at its early June meeting,” wrote Andrew Grantham, a senior economist at CIBC Capital Markets.
The central bank is set to make its next interest rate decision on June 4.
Grocery prices rose in April
Gas prices dropped 18.1 per cent in April compared to a year earlier, and natural gas prices fell 14.1 per cent during the same period — both big jumps from the previous month as the divisive tax ended, StatsCan noted.
Even as consumers paid less at the pump, groceries were more expensive in April, increasing 3.8 per cent year-over-year compared to 3.2 per cent in March. Grocery inflation has now outpaced overall inflation for three months in a row.
Fresh veggies, fresh and frozen beef, coffee and tea, plus sugar and other sweets contributed the most to the rise in store-bought food prices — and restaurant meals also got more expensive last month, the data agency said.
