Investing.com -- Canadian inflation cooled more than expected in April, with the Consumer Price Index rising 1.7% from a year earlier, down from 2.3% in March, but higher than estimates of a 1.6% increase. A Statistics Canada report shows deceleration was largely driven by a steep 12.7% drop in energy prices, headlined by an 18.1% year-over-year decline in gasoline.
Excluding energy, however, inflation remained higher at 2.9%, up from 2.5% in March, underscoring persistent underlying price pressures. On a monthly basis, the CPI fell 0.1%, with the seasonally adjusted figure declining 0.2%.
The energy price drop was fueled by the removal of the federal consumer carbon price, which sharply reduced prices for gasoline and natural gas across most provinces. Additional downward pressure came from increased OPEC+ supply and weaker global oil demand due to international trade slowdowns tied to tariffs.
Food inflation remained a point of concern, as grocery prices rose 3.8% year over year, the third consecutive month food outpaced the all-items CPI. Major contributors included fresh or frozen beef (+16.2%), coffee and tea (+13.4%), and fresh vegetables (+3.7%).
Travel tour prices also rebounded, rising 6.7% on the year and 3.7% month-over-month, following a notable March decline. Alongside restaurants, where prices rose 3.6% year over year, services inflation proved more resilient despite the broader energy-driven slowdown.
Regionally, inflation eased across most provinces, with Quebec being the exception as its cap-and-trade system shielded consumers from the carbon price removal seen elsewhere. Statistics Canada noted that there will be no special CPI adjustment for tariffs, though their impact on price levels will remain under active observation.
In response to the release, CIBC (TSX:CM)’s Andrew Grantham said, "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."