Canada’s annual inflation rate fell to 4.3 per cent in March as higher mortgage interest costs were offset by lower energy prices.
Statistics Canada reported Tuesday that inflation slowed from 5.2 per cent in February, continuing along a downward trajectory that’s expected to bring it down to three per cent by mid-year.
The continued slowdown in inflation since last summer has now brought the annual rate down to the lowest it’s been since August 2021.
The slowdown comes as global prices pressures ease and high interest rates weigh on the economy.
But the deceleration hasn’t brought much relief to homeowners with new mortgages or renewing their mortgages at high interest rates. Mortgage interest costs rose at the fastest pace on record last month, up 26.4 per cent from a year ago.
Grocery prices are also still rising rapidly, but at a slower pace. Grocery prices were up 9.7 per cent on a year-over-year basis in March, down from 10.6 per cent in February. Statistics Canada said the deceleration was driven by lower prices for fruits and vegetables.
The Bank of Canada’s preferred measures of core inflation, which it uses to look through volatility in prices, also trended downward in March.
Inflation in Canada is expected to continue decelerating this year but the Bank of Canada has said it won’t rest until inflation gets back to its two per cent target.
The central bank has signalled interest rates may have to stay higher for longer to get there.
According to its latest forecasts, the Bank of Canada is expecting inflation to return to its two per cent target by the end of 2024.