The annual rate of inflation cooled to 4.3 per cent in March, Statistics Canada said Tuesday, even as Canadians homeowners faced ballooning payments on their mortgages.
That marks the lowest level for annual inflation since August 2021 and a sharp slowdown from the 5.2 per cent seen in February.
Canada’s annual inflation rate has been steadily declining since last summer, as global price pressures ease and high borrowing costs weigh on spending.
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But the rapid rise in the Bank of Canada’s interest rate, designed to cool inflation, has also compounded the pain and driven costs higher for some Canadians.
Specifically, mortgage interest costs rose 26.4 per cent in March — the largest yearly increase on record, Statistics Canada noted.
Canadians are today renewing their mortgages at much higher rates than a year ago, when the Bank of Canada first started raising its policy rate from the rock-bottom 0.25 per cent. A year later, the central bank’s benchmark rate stands at 4.5 per cent following one of the fastest policy tightening cycles in the institution’s history.
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Meanwhile, Statistics Canada said March was the second consecutive month to see year-over-year drops in prices at the gas pumps. But the agency noted much of the relief in the annual comparison was tied to the spike in gas prices in March 2022 tied to Russia’s then-nascent invasion of Ukraine.
The cost of food from the grocery store was up 9.7 per cent in March, representing a slight cooling from the 10.6 per cent seen in February.
Statistics Canada pointed to lower prices for fresh fruit and vegetables as driving the modest relief. In particular, the agency said shoppers were finding lower prices for grapes, oranges, celery and cucumber.
Inflation is expected to continue slowing in the coming months, with many economists including the Bank of Canada forecasting the annual rate to fall to about three per cent by mid-year.
— with files from The Canadian Press
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