- The consumer price index rose 0.9% year-on-year (y/y) in March, down from 2.2% in February.
- Adjusting for seasonality, consumer prices also fell 0.9% month-on-month, the largest monthly decline since the series’ inception in 1992.
- Energy prices led the declines in March down 11.6% y/y, driven by a 21.2% decline in gasoline prices. Most other energy prices were down on the month with the exception of electricity, which edged marginally higher (but still decelerating from February).
- Most other major components saw price growth slow in March. Only household operations and alcohol, tobacco and cannabis products saw price growth accelerate in March.
- Reflecting the broad-based slowing in prices, the Bank of Canada’s core inflation measures all edged lower in the month. CPI-common fell to 1.7% (from 1.8%), CPI-median to 2.0% (from 2.1%), and CPI-trim to 1.8% (from 2.0%).
Key Implications
- Inflation is the least of anyone’s concerns at the moment, but it is notable that the mandated closure of large swathes of the economy in late March is having a profound effect on price growth. This is yet another data series showing unprecedented movements and which will continue to do so at least through the month of April.
- The good news is that with signs that the virus curve is flattening, policy makers are now looking to gradually re-open economies in May. After two months of horrific data, we may finally be through the worst. Of course, this assumes that measures are removed slowly enough to avoid another increase in infections. Fingers firmly crossed.
