{"id":617173,"date":"2026-04-20T19:38:08","date_gmt":"2026-04-20T19:38:08","guid":{"rendered":"https:\/\/www.newsbeep.com\/ca\/617173\/"},"modified":"2026-04-20T19:38:08","modified_gmt":"2026-04-20T19:38:08","slug":"canadas-inflation-rate-hits-2-4-in-march-as-war-fuels-highest-monthly-gas-price-increase-on-record","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/ca\/617173\/","title":{"rendered":"Canada\u2019s inflation rate hits 2.4% in March as war fuels highest monthly gas-price increase on record"},"content":{"rendered":"

Open this photo in gallery:<\/a><\/p>\n

Motorists fill up their cars at a gas station in Ottawa. Gas prices surged 21.2 per cent in March from February.Spencer Colby\/The Globe and Mail<\/p>\n

Canada\u2019s inflation rate jumped in March as consumers faced the largest monthly gas-price increase on record, owing to the Iran war.<\/p>\n

The annual inflation rate hit 2.4 per cent last month, accelerating from 1.8 per cent in February, Statistics Canada reported Monday in its consumer price index report. Despite the quickening of inflation, the figures came in weaker than analyst expectations of 2.6 per cent.<\/p>\n

Gasoline prices have risen sharply in recent weeks because of the Middle Eastern conflict<\/a>, which has throttled deliveries of crude oil and other commodities through the critical Strait of Hormuz.<\/p>\n<\/p>\n

Prices at the pump surged by 21.2 per cent in March from February, the largest monthly increase recorded by Statscan. Excluding gas, the CPI rose by an annual 2.2 per cent in March, versus 2.4 per cent in February.<\/p>\n

\u201cIt could have been worse,\u201d said Bank of Montreal chief economist Doug Porter in a note to clients. He added that \u201cthe picture for underlying inflation was a bit better than expected, and continues the recent pattern of steadily moderating core inflation trends.\u201d<\/p>\n

Monday\u2019s report did little to sway predictions for the Bank of Canada<\/a>.<\/p>\n

The central bank is widely expected to hold interest rates at 2.25 per cent at next week\u2019s announcement on April 29. Interest rate swaps, which capture market expectations of monetary policy, were pricing in one quarter-point hike by the end of the year as of Monday, according to Bloomberg data, similar to odds on Friday.<\/p>\n

Revised BoC survey of firms found higher expected input prices after Iran war<\/a><\/p>\n

The Bank of Canada held rates steady in March, in the early days of the world and oil-price shock. Governor Tiff Macklem<\/a> has said the central bank is prepared to raise interest rates if the shock feeds into a broader set of prices and pushes up inflation expectations. But he has generally downplayed the risk of this happening in the near-term, with slack in the Canadian economy acting as a counterweight to inflationary pressures from energy prices.<\/p>\n

Energy costs are largely the only factor pushing up inflation, CIBC Capital Markets senior economist Andrew Grantham said in a note to clients. <\/p>\n

\u201cFor now we expect few signs of increased inflationary pressures outside of the direct impact on energy costs,\u201d he said. Food inflation is expected to ease and higher air-travel costs will likely impact inflation rates in the summer, he added. <\/p>\n

Food costs rose 4.4 per cent year-over-year in March, up slightly from February\u2019s rate increase. The price of fresh vegetables saw the largest increase since August, 2023, with the reading coming in at a 7.8-per-cent increase year-over-year. Consumers shopping for cucumbers, peppers and celery in particular felt the pinch, with all three products seeing \u201cnotable price growth\u201d linked to shorter supplies because of \u201cadverse growing conditions in producing countries,\u201d Statscan said.<\/p>\n

Economists expect April\u2019s inflation rate to rise again, to around 3 per cent. <\/p>\n

Gas prices are again expected to be a key factor, according to TD senior economist Leslie Preston. Despite having fallen as a result of the U.S.-Iran ceasefire agreement<\/a> earlier this month \u2013 an agreement that is set to expire<\/a> on Wednesday \u2013 oil prices are still nearly 40-per-cent higher than they were a year ago, she said. <\/p>\n

Mr. Porter said the April CPI report \u201calready has two strikes against it.\u201d Gasoline prices remain high, despite the gas tax break<\/a> announced last week by Prime Minister Mark Carney. Further, the removal of the consumer carbon levy last spring \u2013 which had created a drag on inflation numbers \u2013 will no longer be part of the year-over-year calculation.<\/p>\n

\u201cDepending on where oil prices go and how long the Strait remains closed, it\u2019s possible that April will mark the high-water point for inflation this year (with heavy, heavy emphasis on \u2018possible\u2019),\u201d Mr. Porter wrote. <\/p>\n

Mr. Grantham of CIBC expects inflation rates to likely climb over the summer before easing toward the end of the year.<\/p>\n

The central bank\u2019s quarterly business and consumer surveys<\/a> published Monday showed that near-term inflation expectations have risen in response to the Middle East conflict. However, longer-term inflation expectations \u2013 the key concern for the central bank \u2013 remain relatively subdued. <\/p>\n

The business survey took place before the outbreak of the war. Follow-up calls by the central bank found that businesses in \u201cupstream\u201d segments of the value chain \u2013 agriculture, oil and gas, manufacturing and transportation \u2013 have already experienced cost increases. Some companies further down supply chains expect input costs to rise in the coming months. <\/p>\n

At the same time, businesses reported constraints on their ability to pass rising input costs along to customers. A weak demand environment, constrained consumer budgets and elevated competition all makes it difficult to raise prices.<\/p>\n

Even if the Iran war continues, the spike in energy prices is a \u201crelative price shock that will have only minor spillovers to core inflation metrics,\u201d Royce Mendes, head of macro strategy at Desjardins Securities, said in a note to clients. <\/p>\n

\u201cThe Bank of Canada should be able to remain on the sidelines for the rest of this year,\u201d he said. <\/p>\n

With a report from Mark Rendell<\/p>\n","protected":false},"excerpt":{"rendered":"Open this photo in gallery: Motorists fill up their cars at a gas station in Ottawa. Gas prices…\n","protected":false},"author":2,"featured_media":617174,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[45,49,48,46,1398],"class_list":["post-617173","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-business","tag-ca","tag-canada","tag-economy","tag-nodelphi"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/617173","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/comments?post=617173"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/posts\/617173\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media\/617174"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/media?parent=617173"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/categories?post=617173"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/ca\/wp-json\/wp\/v2\/tags?post=617173"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}