Statistics Canada described March’s increase as the largest on record for fuel prices. Energy’s spike also lifted transportation costs, the second‑largest weight in the CPI basket, by 3.7% year over year.
Bank of Canada governor Tiff Macklem, speaking before the March data, tried to play down fears that a short‑term flare‑up in prices would force the central bank’s hand.
“It’s certainly going to go up. We are not surprised, and we are not even that worried if we see near-term inflation expectations go up,” he said.
For now, core inflation – the Bank’s preferred gauge of underlying pressure – appeared better behaved. CPI‑median held at 2.3%, while CPI‑trim edged down to 2.2%, suggesting that the energy shock has not yet bled broadly into other prices.
What it means for rates and mortgages
Financial markets still do not price in a move at the Bank’s upcoming decision. However, they lean toward a 25‑basis‑point hike in December. That reflects concern that sustained energy‑driven inflation could eventually push headline CPI above the 2% target midpoint for longer than policymakers would like.