According to Statistics Canada, inflation was 1.7% in April, down from 2.3% in March. The main factor behind the decline was the repeal of the carbon tax, which led to a sharp drop in gasoline (-18.1%) and natural gas (-14.1%) prices.

However, core inflation measures, which exclude fluctuations in fuel prices and other volatile categories, rose to more than 3%, above the Bank of Canada’s target of 2%.

BMO Chief Economist Douglas Porter said: “Under the surface of the decline in inflation, there are rising prices, particularly for food and autos. This offsets the case for a rate cut.”

Despite this, the Bank of Canada may still cut its interest rate on June 4, amid a weak outlook for economic growth in 2025.

House prices also fell slightly. Economist Tu Nguyen (RSM Canada) attributes this to a decline in demand due to changes in immigration policy.

At the same time, food prices continued to rise: +3.8% year-on-year. Vegetables, meat, sugar, coffee, tea and restaurant meals became more expensive. This was influenced by the weak Canadian dollar and tariffs on some American goods.