Inflation in Canada rises to 2.8% in April due to energy prices

Ottawa —
The annual inflation rate in Canada rose to 2.8% in April, marking its highest level in nearly two years, mainly driven by rising energy and gasoline prices related to Middle East tensions.

Despite the increase from 2.4% in March, inflation came in below economists' expectations, which had pointed to 3.1%, easing some concerns about a broader return of price pressures.

Gasoline prices recorded a sharp annual increase of 28.6%, while the effect of the year-on-year comparison after the cancellation of the carbon consumption tax in April 2025 contributed to raising the annual inflation reading.

However, excluding gasoline, inflation was only 2%, indicating that price pressures remain largely concentrated in the energy sector.

Core measures monitored by the Bank of Canada also showed a decline in April, as the average of the two core inflation indicators fell to 2.05%, the lowest level since January 2021.

Inflation excluding food and energy declined to 1.5%, reinforcing the reading that the rise in gasoline prices has not yet broadly passed through to other goods and services.

These figures give the Bank of Canada room to continue holding the interest rate at 2.25%, while monitoring whether the high energy prices will turn into persistent inflation.

On the other hand, economists warn that prolonged high fuel prices could later lead to increased transportation and goods costs, putting renewed pressure on consumers.

On the living front, rent growth slowed to 3.6%, the lowest level since January 2022, although rents remain more than 30% higher compared to April 2021.

Grocery price increases also slowed to 3.8% after being 4.4% in March, providing some relative relief to households.

The coming months remain critical to determine whether the inflation rise is temporary due to energy, or the start of a broader wave that may push the Bank of Canada to reassess the interest rate path.